Sensex jumps 553 points in a single session: 5 forces behind today’s rally

Dalal Street staged a sharp comeback on Wednesday, reversing the previous session’s losses as improving tech sentiment, a firmer rupee and easing geopolitical tension combined to lift investor confidence. The BSE Sensex jumped 553 points to 77,603.57 in early trade, while the NSE Nifty gained 148.15 points to 24,198.40. The rally came a day after the Sensex had dropped 561.46 points, or 0.72%, to close at 77,054.94, and the Nifty fell 158.95 points, or 0.66%, to settle at 24,052.05.

The rupee strengthened by 5 paise to 96.11 against the US dollar in early trade, recovering after slipping to 96.16 in the previous session. Forex traders said the move was aided by a weaker dollar, although gains stayed capped by higher crude oil prices and continued foreign fund outflows. The dollar index, which tracks the greenback against six major currencies, was down 0.11% at 100.81. Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said the rupee had come under pressure on Tuesday due to surging crude prices, higher US Treasury yields and geopolitical tensions, and expects the currency to trade in a 95.90-96.50 range.

Geopolitical developments also played a role after US President Donald Trump withdrew a proposed 20% transit fee on cargo passing through the Strait of Hormuz, replacing it with trade and investment agreements with Gulf countries. Brent crude eased toward the $85-a-barrel mark following the announcement, though it remained elevated around $85.6 per barrel. At the same time, the US announced a full blockade on ships travelling to or from Iranian ports, while keeping the Strait open for all other maritime traffic. Iran responded by threatening to halt all energy exports from the region, saying oil and gas exports would be ‘either for everyone or for no one.’

Foreign Institutional Investors sold equities worth Rs 739.69 crore on Tuesday, but broader sentiment has improved through July. After months of sustained selling, foreign portfolio investors turned net buyers this month, investing $2.59 billion (Rs 24,662 crore) in the first 10 days, with equities accounting for more than 61% of the total inflows.

Asian markets rallied after softer-than-expected US inflation data raised hopes that the Federal Reserve may adopt a less aggressive monetary policy stance. MSCI’s Asia Pacific equities gauge climbed 2%, on course for its biggest gain in a month, with technology stocks leading the advance as South Korea’s Kospi surged around 7% and Japan’s Nikkei 225 and Hong Kong’s Hang Seng also traded higher.

Back home, technical analysts said the Nifty continues to hold above its key 23,900 support level, with the broader market bias remaining sideways to bullish in the near term.

Bombay Stock Exchange building at Dalal Street, Mumbai. Wikimedia Commons/by BSEINDIA (CC BY-SA 3.0).