Stock markets logged robust single-day gains on Monday as border tensions between India and Pakistan eased. Benchmark indices, Sensex and Nifty, surged over 3% as bullish sentiment dominated the D-street. Besides, the broader geopolitical picture also took an optimistic turn amidst signs of de-escalation between the Ukraine and Russia conflict and the US lowering tariff rates on the Dragon.
BSE Sensex concluded the trading session at 82,429 level mark, up by nearly 3,000 points. Whereas, NSE Nifty50 was just a tad away from the psychological 25,000 level, surging over 3.82% or 916 points. D-street's fear gauge, the Nifty volatility index, declined by nearly 15%, signalling reduced market uncertainty.
Nearly all stocks from the Sensex 30 pack were trading in green, except Sun Pharma and IndusInd Bank. Infosys, HCL Tech, Tata Steel, Eternal (formerly Zomato) and Tech Mahindra were among the top gainers.
Best Day in 4 Years
Analysts believe that a series of positive developments has boosted investor confidence. Earlier, sentiment had been dampened by prevailing macro uncertainty, but a sharp turnaround is now evident.
"In the first instance, the India-Pakistan ceasefire deal has served to de-escalate regional tensions, always beneficial for domestic equities. Secondly, reports of de-escalation of the Russia-Ukraine hostilities, with both sides agreeing to negotiate peace in Istanbul, have capped global uncertainty and improved risk appetite everywhere in markets," said Swapnil Aggarwal, director, VSRK Capital.
Sectorally, all sectors concluded the session in green. Nifty IT was the best-performing index, surging over 2,400 points or more than 6% in just a single day. Even Nifty Pharma, which witnessed a bearish sentiment owing to Trump's recent announcement, concluded the day in green with marginal gains.
"The Nifty witnessed its best day in four years as multiple positive news developments triggered a risk-on sentiment. Technically, the index has broken out of recent consolidation across multiple timeframes, confirming a positive trend. Additionally, it continues to sustain above a crucial moving average," said Rupak De, Senior Technical Analyst at LKP Securities.
What now for investors?
Besides geopolitical events turning the air favourable, the recent foreign investor action has also added to the overall optimism. After a prolonged selling period, FIIs turned purchasers last month, continuing their selling spree so far.
Market analysts believe that the current Q4 earnings season and corporate guidance will be major factors guiding the market movement.
"Moving forward, Investors will closely analyse the latest Q4 earnings releases and management guidance which will help shape future expectations and ultimately influence overall market movement," said Palka Arora Chopra, director, Master Capital Services.
Investors will also keep an eye on the latest policy updates from the US administration as tariff implications have turned out to be highly volatile for markets, she added.
"Going forward, any dips are likely to be bought into as long as the index remains above 24,350. On the higher end, this leg of the rally might extend towards 25,350/25,750 in the short term," said De.
