Benchmark stock market indices opened higher on Wednesday, supported by stock-specific reactions to key corporate earnings and a fall in oil prices after US President Donald Trump indicated that a possible peace deal with Iran may be within reach.
At 9.15 am, the Nifty 50 was up 0.58% at 24,171, while the BSE Sensex added 0.53% to 77,424.36. Gains were broad-based, with all 16 major sectors in the green and the broader market also moving higher.
The small-cap and mid-cap indices rose about 1% each in early trade. Market sentiment was aided by a drop in Brent crude prices to $108 a barrel from about $115 earlier this week.
Oil prices eased after Trump said he would pause “Project Freedom”, an operation to help escort ships through the Strait of Hormuz, citing “great progress” towards a comprehensive agreement with Iran. Tehran had not reacted to Trump’s comments on the negotiations at the time of writing.
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the market had been moving up and down since the war began, reacting to developments on the war front and fluctuations in crude prices.
He said declarations by leaders in the US and Iran, particularly by Trump, had lost credibility because of inconsistency, and that the market would therefore be careful in responding to the latest declaration by Secretary of State Marco Rubio that “operation Epic Fury is concluded”.
Vijayakumar said the crude market had responded positively to that declaration, with Brent falling to around $108. He also said investors needed to remain mindful of current valuations, with the Nifty trading at around 20 times TTM earnings, while the Nifty Midcap and Nifty Smallcap indices were at 35 times and 30 times respectively.
He said valuation comfort was in large-caps, and added that high valuations in the broader market could be justified only for stocks with high growth potential. In the short run, he said, this valuation gap may continue, but not in the long run. Indian shares, meanwhile, started Wednesday on a firm note, with benchmark indices, broader markets and all major sectors posting gains.
