Markets: With W. Asian peace prospects, Indian equity markets jump nearly 4%
Virendra Pandit
New Delhi: With US President Donald Trump postponing his “stone age” threat against Iran to two weeks, Indian equity markets jumped nearly 4 four percent on Wednesday, as the Reserve Bank of India held repo rate at 5.25 percent and maintained a neutral stance.
Meanwhile, the volatility index declined sharply by 21 percent, indicating easing market anxiety and improving risk appetite among investors.
While BSE benchmark index Sensex jumped 3.95 percent (2946.32 points) to close at 77562.90, Nifty soared 3.78 percent (873.70 points) to close at 23997.35.
Despite inflation remaining within the target band, the central bank flagged rising risks from volatile oil prices and potential second-round effects that could weigh on consumption and delay investment recovery.
Rate-sensitive sectors led a sharp rally in the broader markets on Wednesday, with auto, real estate, banking and financial stocks surging after the RBI kept its benchmark repo rate unchanged.
Investor sentiment was further buoyed by improving global cues following a ceasefire announcement between the United States and Iran, easing concerns around energy prices and geopolitical tensions.
Meanwhile, the central bank’s six-member Monetary Policy Committee (MPC) unanimously voted to keep the repo rate steady at 5.25 percent, while retaining its neutral stance.
RBI Governor Sanjay Malhotra said policymakers had adopted a “wait and watch” approach amid heightened uncertainty following the ongoing West Asia conflict, which had driven crude prices higher, weakened the Indian rupee and disrupted trade flows.
Equity benchmarks responded positively to these domestic and global developments, bringing smiles back on Dalal Street.
Broader markets outperformed, with both midcap and smallcap indices rising over 4 percent. The Nifty Bank index surged more than 5 percent to 55,552.25, while financials, auto, realty and PSU bank indices advanced between 5 percent and 7 percent.
Heavyweights Axis Bank, ICICI Bank, HDFC Bank, Yes Bank and SBI posted 4-6 percent gains under Bank Nifty.
In the auto pack, Ashok Leyland, Samvardhana, Motherson, Maruti Suzuki and TVS Motor Company rallied between 7 percent and 13 percent. Realty stocks including Prestige Estates Projects, Phoenix Mills, Macrotech Developers and Godrej Properties gained 7 percent to 8 percent.
Market breadth remained firmly positive, with around 2,940 stocks advancing, 266 declining and 61 remaining unchanged out of 3,267 traded on the NSE. As many as 45 stocks hit their 52-week highs, while 10 touched 52-week lows. Additionally, 228 stocks were locked in upper circuits, compared to just 15 in lower circuits.
Among Nifty 50 constituents, InterGlobe Aviation, Shriram Finance, Adani Enterprises, Larsen & Toubro and Bajaj Finance were among the top gainers, while Coal India, Oil and Natural Gas Corporation, Tech Mahindra, Nestle India and Sun Pharmaceutical Industries lagged.
In the midcap space, stocks like Ashok Leyland, Hindustan Petroleum Corporation Limited, L&T Finance, AU Small Finance Bank and BSE Limited rallied 8 percent to 12 percent, while Oil India Limited, National Aluminium Company, Marico and Lupin declined.
Among smallcaps, Pine Labs, Cholamandalam Investment and Finance Company, Nuvama Wealth Management, Five-Star Business Finance and Force Motors jumped 9 percent to 15 percent, while Garden Reach Shipbuilders & Engineers and Firstsource Solutions slipped around 2 per cent.
