Sensex Rises Over 500 Points, Nifty Tops 24,200: Key Reasons Behind Today's Rally

Indian benchmark indices opened higher on Wednesday as softer-than-expected US inflation data improved global risk sentiment, helping investors look past renewed geopolitical tensions in West Asia and elevated crude oil prices.

At around 9:30 am, the Sensex was up 520.41 points (0.68%) at 77,575.34, while the Nifty 50 gained 159.70 points (0.66%) to 24,211.75.

Banking stocks led the rally, with the Nifty Private Bank index rising 1.15%, Nifty PSU Bank gaining 1.07%, and Nifty Bank advancing 1.02%. The broader market also remained firm, with the Nifty Midcap 100 and Nifty Smallcap 100 climbing 0.61% and 0.84%, respectively, while the India VIX declined 3.42%, indicating easing market volatility.

Softer US Inflation Boosts Risk Appetite

Investor sentiment improved after US inflation came in below expectations in June, easing concerns over further Federal Reserve rate hikes. Lower inflation is viewed as supportive for emerging markets such as India, as it reduces pressure on the US dollar and encourages foreign portfolio flows into risk assets.

Adding to the positive sentiment, US lawmakers proposed a revised Russia sanctions bill that reduced the earlier proposal of imposing 500% tariffs on countries importing Russian energy. The revised draft would instead allow US President Donald Trump to impose tariffs of up to 100%, easing concerns over a potential escalation in global trade tensions.

Asian markets traded higher, while Wall Street futures also pointed to a positive start, supporting domestic equities.

Banking Gains Offset IT Weakness

Information technology stocks, however, remained under pressure after IBM reported weaker-than-expected quarterly earnings. The Nifty IT index traded lower, with Infosys, Persistent Systems and TCS falling up to 1%. IBM shares had slumped 25% overnight after the company's revenue outlook disappointed investors.

Meanwhile, oil prices extended gains for a third straight session after renewed US-Iran hostilities. Brent crude rose 1.72% to $86.19 a barrel, while US WTI crude gained 1.4% to $80.40 as President Donald Trump warned of further strikes on Iran following the reinstatement of the US blockade on Iranian shipping through the Strait of Hormuz.

The Indian rupee opened almost unchanged at 96.17 against the US dollar, compared with the previous close of 96.20.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said persistent uncertainty in West Asia and Brent crude hovering around $86 continue to limit the market's upside. He added that while rising inflation and a deficient monsoon remain domestic concerns, robust credit growth and healthy demand in sectors such as automobiles provide support. According to Vijayakumar, investors should remain invested in fairly valued growth sectors, with banks, NBFCs, auto companies and digital platform businesses expected to post healthy June-quarter earnings.