Sensex jumps over 1,000 points, Nifty 50 settles above 25,100; why did Indian stock market rise today? EXPLAINED

Indian stock market benchmarks, the Sensex and the Nifty 50, clocked solid gains on Friday, June 20, despite escalating Israel-Iran tensions.

The Sensex opened at 81,354.85 against its previous close of 81,361.87 and rose 1,133 points, or 1.4 per cent, to an intraday high of 82,494.49. On the other hand, the Nifty 50 opened at 24,787.65 against its previous close of 24,793.25 and rose 1.4 per cent to an intraday high of 25,136.20.

Finally, the Sensex closed 1,046 points, or 1.29 per cent, higher at 82,408.17, while the Nifty 50 settled at 25,112.40, up 319 points, or 1.29 per cent.

The BSE Midcap index jumped 1.20 per cent and the Smallcap index rose 0.55 per cent.

The overall market capitalisation of BSE-listed firms rose to nearly ₹448 lakh crore from nearly ₹443 lakh crore in the previous session, making investors richer by about ₹5 lakh crore in a single session.

Why did the Indian stock market rise today?

The Indian stock market witnessed healthy buying across segments. Here are four factors that seem to be behind the stock market rally:

1. Short covering after recent fall

Experts highlighted that a bounce in the Indian stock market is on expected lines as it has been subdued for the last three sessions. As the outlook of the Indian economy remains bright, investors seem to be buying stocks at cheaper valuations.

"Investors may be short covering on hopes of a truce between Israel and Iran. However, if the tensions escalate further, the market may again witness a selloff," said SEBI-registered fundamental research analyst Avinash Gorakshkar.

2. Crude oil prices fall

Brent crude oil prices crashed over 2 per cent, boosting domestic market sentiment. Oil prices crashed even as tensions between Israel and Iran escalated further. Experts highlighted that crude oil is witnessing profit booking as the US delayed a decision on its involvement in the Israel-Iran conflict.

White House Press Secretary Karoline Leavitt on Thursday (June 19) said President Donald Trump will decide on the US role in the Iran-Israel conflict within two weeks.

Benchmark Brent Crude prices fell more than 2 per cent to near $77 per barrel. Experts pointed out that if crude prices remain below the $80 a barrel mark, it will not negatively affect the Indian stock market.

3. FPIs resume buying

Foreign portfolio investors (FPIs) have been buying Indian equities for the last three consecutive sessions amid a decline in the dollar index. On June 19, FPIs bought Indian equities worth ₹934.62 crore in the cash segment.

As the Indian economy's macro outlook remains strong, experts believe foreign investors could be eying fairly valued segments of the stock market after the recent fall.

4. Technical factor

Experts say the domestic market is in a range, and a breakout on either side will decide its direction.

"The outlook remains positive, and a decisive move above 25,200 on the Nifty would signal the end of the ongoing five-week consolidation phase and open the path toward the 25,600–25,800 zone. In the absence of any major domestic events, global markets will continue to guide sentiment," said Ajit Mishra, SVP of Research at Religare Broking.

According to Rupak De, Senior Technical Analyst at LKP Securities, the index has reclaimed the 21-day EMA, which could provide further momentum for an upward move.

"Support is now placed at 24,850, and the index remains a ‘buy on dips’ as long as it holds above this level. On the higher side, it may continue advancing towards 25,350 and beyond," said De.

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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.