India's stock market bounced back on Tuesday after US President Donald Trump signalled a potential end to the Iran war, offering a reprieve to a market battered by geopolitical volatility.
The 30-share S&P BSE Sensex surged as much as 960.09 points, or 1.23%, to 78,526.25 points, while the wider Nifty 50 gained 1.14% to an intraday high of 24,303.80 points.
The anticipated bounce follows a brutal trading session where domestic indices hit near one-year lows and volatility spiked to levels not seen in 21 months.
The primary catalyst for the surge is the sudden cooling of the oil market, with Brent crude futures tumbling 6.6% to $92.45 a barrel and US West Texas Intermediate (WTI) falling to $88.65.
For India, which imports more than 80% of its oil, the price drop mitigates immediate concerns regarding imported inflation and a widening current account deficit.
“The panic reaction in crude prices which took Brent to near $120 yesterday has seen a reversal this morning…,” VK Vijayakumar, chief investment strategist at Geojit Investments Ltd., told Hindustan Times over email.
To be sure, geopolitical crises like the ongoing war have short-term impact on the economy and markets. The idea is to stay invested, Vijayakumar said.
“The correction in the market has made stock prices, particularly of large caps, fair. Sectors like financials, automobiles, pharmaceuticals and defence have good prospects,” he said.
