Sensex, Nifty ends higher; crude falls as markets recover from six-week slide

The Sensex closed 564.03 points, or 0.76%, higher at 74,858.99, while the Nifty 50 rose 67.90 points, or 0.29%, to 23,414.30. The Sensex opened at 74,535.18, while the Nifty opened at 23,330.20.

In Short

• Crude oil prices fell, easing inflation and cost concerns
• Six-week losing streak ended with bargain-buying in large caps
• Twelve of sixteen sectors closed in positive territory

Benchmark indices closed higher on Monday as bargain-buying after six consecutive weekly declines helped markets recover, while a fall in crude oil prices and hopes of diplomatic engagement over the Iran-US conflict eased some pressure on investors.

The Sensex closed 564.03 points, or 0.76%, higher at 74,858.99, while the Nifty 50 rose 67.90 points, or 0.29%, to 23,414.30. The Sensex opened at 74,535.18, while the Nifty opened at 23,330.20.

The gains came despite renewed geopolitical tensions, with US President Donald Trump warning Iran of economic collapse or leadership change unless it reaches a deal, while Iran's military threatened a strong response to any fresh attack. Investors, however, took some comfort from the decline in oil prices and hopes that this week's UN meetings could open a path for diplomatic engagement. Reuters reported that the Nifty and Sensex had already fallen for six straight weeks, their longest losing streak in six years.

CRUDE OIL FALLS AS DIPLOMATIC HOPES GROW

Crude oil prices provided some relief to Indian equities on Monday.

At the time of market close, Brent crude was trading at $101.43 a barrel, down 2.35%, while WTI crude was at $98.02, lower by 2.27%.

Brent had moved above $108 last week as tensions in the Middle East raised concerns about supply disruptions. Its decline on Monday came as investors looked for signs of diplomatic progress at the United Nations and as Saudi oil shipments showed a partial recovery.

Reuters reported that oil prices fell to an 11-day low on Monday, with hopes of US-Iran diplomacy and higher Saudi shipments helping reduce some of the risk premium in crude.

For India, a sustained fall in crude prices could help ease concerns around inflation, the import bill and corporate costs. However, Brent remains above $100, meaning oil continues to be a key risk for the market.

BARGAIN-BUYING AFTER SIX WEEKS OF LOSSES

Monday's gains also came after a prolonged period of weakness in Indian equities.

The Nifty and Sensex had declined for six consecutive weeks before Monday, making this one of the longest losing streaks for the benchmarks in recent years.

The extended correction created room for bargain-buying, particularly in large-cap stocks that had faced selling pressure during the recent decline.

The recovery was visible in several heavyweight stocks. UltraTech Cement was the biggest Sensex gainer, rising 4.11%, while HCLTech gained 3.42%. Eternal rose 2.59%, Titan gained 2.49% and ITC advanced 1.93%.

Sun Pharma rose 1.77%, Asian Paints gained 1.70%, HDFC Bank climbed 1.49% and TCS added 1.39%.

Among other major gainers, Trent rose 1.33%, Larsen & Toubro 1.20%, BEL 1.19%, Reliance Industries 1.11% and IndiGo 0.88%.

Large financial stocks also helped keep the benchmark indices in positive territory.

HDFC Bank gained 1.49%, while Kotak Mahindra Bank rose 0.53%, ICICI Bank advanced 0.48% and SBI gained 0.63%.

Reliance Industries, which has a significant weight in the benchmark, gained 1.11%.

This buying in heavyweight stocks helped the Sensex gain more than 500 points even though the broader market was relatively subdued.

The market, however, did not see a broad-based rally across all segments.

The broader market indices ended mixed.

The Nifty 100 gained 0.25%, while the Nifty 200 rose 0.14% and the Nifty 500 added 0.09%.

Midcaps and smallcaps, however, remained under pressure. The Nifty Midcap 50 declined 0.02%, the Nifty Midcap 100 fell 0.29% and the Nifty Smallcap 100 dropped 0.07%.

India VIX, a measure of expected market volatility, fell 1.07% to 11.26.

This divergence suggests that Monday's recovery was driven more by buying in selected large-cap stocks than by a broad-based recovery across the market.

12 OF 16 SECTORS CLOSE HIGHER

Twelve of the 16 major sectoral indices ended in positive territory.

Nifty Pharma was the biggest sectoral gainer, rising 1.16%, followed by Nifty Realty, which gained 1.14%. Healthcare rose 1.10%, while FMCG and consumer durables gained 0.95% each.

Mid-small healthcare rose 0.90%, while Nifty 500 Healthcare gained 0.84%. Oil & Gas advanced 0.53%, private banks rose 0.29% and financial services 25/50 gained 0.20%.

On the other hand, Nifty Metal declined 0.61%. Mid-small financial services fell 0.81%, while mid-small IT and telecom declined 0.89%. Financial services ex-bank fell 0.57%.

Nifty IT ended marginally lower by 0.08%, while PSU Bank declined 0.06%.

The Rs 2.3-billion NSE IPO, one of the biggest primary-market offerings in India, also remained in focus as it closed on Monday.

The issue had been fully subscribed on Friday. The heavy activity in the primary market has been one of the factors investors have been monitoring because large IPOs can absorb liquidity that could otherwise move into the secondary market.

Reuters reported that the NSE IPO was scheduled to close on Monday after being fully subscribed on Friday.

The primary-market activity comes at a time when the secondary market has gone through a prolonged correction, creating a contrast between strong demand for new issues and continued caution in listed equities.

Vinod Nair, Head of Research, Geojit Investments Limited, said, that the improving sentiment ahead of the upcoming U.S.-China talks, renewed hopes of diplomatic engagement between the U.S. and Iran at the UN, and the decline in oil prices and bond yields have provided relief to investors.

"The easing of concerns around inflation and energy costs has supported a broad-based recovery across sectors and supported overall market sentiment. Furthermore, the earnings cycle appears to be turning positive, coupled with relatively attractive valuations in select pockets of the market, continues to support a constructive medium-term outlook for equities. However, in the near term, geopolitical developments and interest-rate expectations will remain key variables influencing investor behaviour and market direction," he added.

The comments underline the mixed backdrop for Indian equities. Lower oil prices and easing bond yields are providing some relief, while geopolitical developments and expectations around global interest rates remain key risks.

Monday's recovery does not remove the key risks that have weighed on Indian equities in recent weeks.

Crude oil remains above $100 a barrel, global interest rates remain elevated and geopolitical tensions in the Middle East continue to create uncertainty around energy supplies. The US-Iran situation and developments at the UN will therefore remain important for oil prices and broader market sentiment.

At the same time, the recent six-week decline has created room for bargain-buying in stocks that have corrected sharply.

The next phase for the market is likely to depend on whether crude can remain below its recent highs, whether geopolitical tensions show signs of easing and whether foreign and domestic investors continue to support equities.

For Monday, however, lower oil prices, bargain-buying and gains in heavyweight stocks were enough to help the Sensex and Nifty end higher after their prolonged losing streak.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

- Ends