Stock markets have staged a sharp recovery this week, with the Sensex gaining over 2,000 points, or around 2.7%, from last week’s low. The rebound comes even as tensions in the Middle East continue, raising questions about what is driving the market higher despite global uncertainty.
The rise on Dalal Street follows a steep fall last week, when markets dropped sharply due to the Iran conflict and rising crude oil prices. Both Sensex and Nifty had entered a correction phase, with investor sentiment turning weak.
The S&P BSE Sensex gained 492.29 points to 76,563.13, while the NSE Nifty50 added 163.65 points to 23,744.80 as of 10:38 am. The main drivers for today’s rally were gains in information technology (IT) and auto sector stocks.
OIL PRICES COOL OFF FROM RECENT HIGHS
A key trigger for the market’s recovery has been the movement in crude oil prices.
As of 10 am, Brent crude was trading at $101.12 per barrel, down 2.22%, while WTI crude was at $93.16, down 3.17%. The fact that oil prices have not surged sharply beyond recent highs has reduced immediate pressure on markets.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said, “Despite the uncertainty regarding the war markets have staged a bounce back. One factor that enabled this bounce back is crude remaining around the $102 level and fears of spiking above $120 not materialising.”
He added, “The near-term scenario will be one of markets responding mildly positively to some good news and negatively to bad news.”
RECOVERY DRIVEN BY BARGAIN BUYING AND DII SUPPORT
One of the main reasons behind the current rise is bargain buying. After the sharp fall last week, many stocks were available at lower levels, which attracted investors back into the market.
At the same time, domestic institutional investors have played a key role in supporting the market. Data for March so far shows that foreign institutional investors have sold shares worth Rs 70,989.96 crore, while domestic institutional investors have bought shares worth Rs 88,345.38 crore.
This shows that while FIIs have been heavy sellers, DIIs have absorbed the selling pressure with strong buying, helping the market stabilise and recover.
Strength in global markets, especially in Asia, has also supported the recovery. Positive cues from global markets have helped improve investor sentiment even as geopolitical risks remain.
SECTOR ROTATION AND SELECTIVE BUYING
According to Vijayakumar, foreign investors, while overall sellers, are still selectively buying in certain sectors.
“Despite being sustained sellers in the market, FIIs have been selectively buying in some sectors like telecom. This partly explains the resilience in telecom stocks,” he said.
He also pointed to a shift in investment trends.
“There is a portfolio churn happening away from IT and highly valued FMCG stocks towards telecom, pharmaceuticals, defense and select financials. Market leaders and fancied stocks in these segments will continue to be resilient even in a choppy market,” he added.
TECHNICAL VIEW: RANGEBOUND BUT POSITIVE BIAS
Technical indicators suggest that the market may remain steady in the near term.
Aakash Shah, Technical Research Analyst at Choice Equity Broking Private Limited, said, “Overall, the market setup suggests a range-bound to mildly bullish undertone for the session.”
He added, “Traders may continue to focus on banking, financials, and capital goods stocks, which are showing relative strength. However, with indices approaching key resistance levels, a stock-specific approach with disciplined risk management remains advisable for the trading session ahead.”
CAUTION STILL REMAINS
Despite the recovery, risks have not fully gone away. The Iran war continues to create uncertainty, especially around oil prices, inflation and global growth.
India, which depends heavily on oil imports, remains sensitive to any sharp rise in crude prices.
Overall, the 2,000-point rally in the Sensex reflects bargain buying after last week’s fall, strong support from domestic investors, and the fact that oil prices have not risen sharply beyond recent levels. However, markets are expected to remain cautious and may move within a range until there is more clarity on global developments.
