Sensex jumps over 650 points, Nifty nears 25k; why did Indian stock market rally despite ongoing Israel-Iran tensions?

Stock market today: Despite starting the session on a tepid note, Indian frontline indices made a stellar recovery as the day progressed, with the Nifty 50 and Sensex closing nearly 1% higher. A sharp rebound in buying across sectors—from autos to pharma and FMCG—added positive momentum to tech and financial stocks, helping the frontline indices snap their two-day losing streak. 

The Sensex concluded the session by rallying 677 points, or 0.84%, to close at 81,796, while the Nifty 50 gained 227.90 points, or 0.90%, to settle at 24,946.50. The broader markets also ended higher in line with blue chips, with the Nifty Midcap 100 and Nifty Smallcap 100 indices each gaining 1% in today’s trade.

What led the Indian stock market to end higher despite ongoing Israel-Iran tensions?

Experts highlight the following five key factors that seem to be behind the rise in the Indian stock market today:

1. Hopes of a truce between Israel and Iran

Experts highlight the subtle hints given by the US President Donald Trump that the two warring countries may take steps to ease tensions.

Donald Trump took to his social media platform, Truth Social, to post about the increasing Israel-Iran conflict, claiming that both countries should sit down for talks and use trade to make a deal, in a similar way he got India and Pakistan on the table.

"Reports of Donald Trump mediating between the two countries have raised hopes of a ceasefire, lending support to market sentiment," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

2. Short covering in an oversold market

Experts suggest that investors may have engaged in short covering following the recent selloff in the domestic market, as valuations have moderated to some extent.

"Past experience tells us that times of uncertainty and risk-off are buying opportunities for long-term investors. The difference this time is that the risk-off has not triggered big selling in equities, making their valuations attractive. Long-term investors can use this risk-off scenario to buy relatively attractively valued stocks like financials," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

3. Oil prices remain stable

Crude oil prices have largely remained stable after a sharp rise of over 7 per cent on Friday, influencing Indian stock market sentiment.

Experts highlighted that Brent Crude prices remained below the $80 per barrel mark, which is unlikely to significantly impact input costs and corporate profitability.

4. The underlying sentiment remains positive due to favourable macro

India's bright macro outlook amid easing inflation and expectations of an above-normal monsoon this year keeps the medium to long-term prospects of the market positive.

The World Bank expects the Indian economy to grow at 6.3 per cent in FY26. With over 6 per cent growth, India would be the fastest-growing major economy in the world. Moreover, the World Bank expects the Indian economy to grow slightly faster, at 6.5 per cent in FY27 and 6.7 per cent in FY28.

5. Technical factor

The Nifty 50 reclaimed the 24,950 level during the session.

According to Shrikant Chouhan, the head of equity research at Kotak Securities, a break above 24,750 could extend the pullback move up to 24,950–25,000.

According to analysts at Axis Securities, the trend-deciding level for the day is 24,649. If Nifty trades above this level, it may further rally up to 24,824-24,930-25,106 levels.

Read all market-related news here

Read more stories by Nishant Kumar

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.