Sensex rises over 600 points, jumps over 2,100 points in 3 sessions— What is driving the market despite US-Iran war?

The Indian stock market benchmark, the Sensex and the Nifty 50, rose for the third consecutive session on Wednesday, 18 March, despite a raging war in the Middle East, elevated crude oil prices, and the rupee's weakness.

The Sensex rose 633 points, or 0.83%, to end at 76,704.13, while the Nifty 50 jumped 197 points, or 0.83%, to settle at 23,777.80.

The BSE 150 Midcap index surged 1.80%, while the BSE 250 Smallcap index soared 2%.

Over these three sessions, the 30-share pack has gained more than 2,140 points, or 3%, while the NSE counterpart has jumped 627 points, or almost 3%.

The overall market capitalisation of BSE-listed firms jumped to nearly ₹439 lakh crore on Wednesday from nearly ₹430 lakh crore on Friday, increasing investors' wealth by more than ₹9 lakh crore in three consecutive sessions.

Why is the stock market rising?

Let's take a look at 5 key factors behind the rise in the stock market today:

1. Short-covering continues

The market is witnessing short covering as the steep fall after the US-Israeli forces attacked Iran has brought some relief on the valuation front.

Many blue-chip stocks, with strong fundamentals and solid growth outlooks, are available at lower prices. Even in mid and small-cap segments, investors are on a spree of bargain hunting, looking for quality players across sectors.

2. The war could be in the final stage

The US-Iran war continues, but according to some experts, the market has begun discounting the possibility of an end to the war, given recent developments.

Media reports suggested that the US and Iran may have been in direct contact. Axios reported that the US envoy Steve Witkoff and Iranian Foreign Minister Abbas Araghchi reopened a communications channel in recent days.

Trump administration officials on Sunday (local time) indicated that they expected the war with Iran to end within weeks or "sooner".

"Short covering is happening. The market is looking more towards Iran and what is happening there. There is a growing view that maybe this and next week may be the last part of this war," said Vinod Nair, Head of Research, Geojit Investments Limited.

3. Hopes of energy supply normalising soon

According to media reports, the Indian government is actively engaged with Iranian authorities for the safe passage of India-bound vessels carrying LPG and crude oil carriers.

Mint reported, quoting sources, that the talks have been "positive," with the passage to be planned in a staggered manner.

"Reports of partial passage of crude are giving participants hope that energy supplies will eventually normalise. Besides, the mean reversion in the index is also playing a role after the sharp decline," said Ajit Mishra, SVP of Research at Religare Broking.

4. Oil prices ease slightly

Brent Crude prices declined about 3% to come to the $100 per barrel mark. Oil prices have been volatile of late after hitting the $119 per barrel mark last week.

Even though oil prices remain elevated, their decline from the recent peak has offered some relief to market participants and eased concerns over a serious negative impact on India's growth and inflation trajectory.

5. The technical angle

The Nifty 50 reclaimed the 23,800 mark on Wednesday, and market experts see the index rising up to 24,000-24,100 driven by short covering.

"For the Nifty, we can expect a best case of 24,000. Maybe it can get extended to 24,100 or 24,150," said Nair.

According to Axis Securities, from a positional perspective, the 24,000–24,150 zone is likely to act as strong resistance, and the 23,000–22,900 range remains a crucial support band that bulls need to defend to maintain market stability.

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