Sensex rallies 1,500 points as oil prices tumble, US midterm outcome lifts markets

Dalal Street investors cheered as the Sensex surged nearly 1,400 points in early trade, buoyed by falling crude prices, renewed foreign fund inflows and a rally on Wall Street after the US midterm results.

In Short

• Markets opened higher, extending previous gains
• Crude oil prices fell sharply, boosting market sentiment
• US midterm election outcome eased global trade uncertainty

Domestic stock markets surged in early trade on Thursday, with the Sensex jumping nearly 1,400 points and the Nifty crossing 24,300, as a sharp fall in crude oil prices and a rally on Wall Street following the US midterm results lifted global sentiment.

Democrats' gains, which gave them control of both chambers of Congress, also raised hopes of greater resistance to President Donald Trump's tariff policies and a possible easing of trade uncertainty. Meanwhile, expectations of de-escalation in the US-Iran conflict and renewed foreign investor buying added to the bullish mood on Dalal Street.

The BSE Sensex was trading at 78,651.14, up 1,349.74 points or 1.75%, at 9:24 am. The NSE Nifty 50 rose 375.70 points, or 1.57%, to 24,336.30 at 9:25 am. On Wednesday, the Sensex had closed 383.55 points higher at 77,301.40, while the Nifty gained 149.75 points to settle at 23,960.60.

CRUDE OIL PRICES FALL

Crude oil's sharp decline has emerged as a key trigger for the rally. Brent crude was trading at $93.59 per barrel, down 1.09%, while US West Texas Intermediate (WTI) fell 1.53% to $86.77.

Oil prices have come under pressure amid hopes that the US-Iran conflict could ease following the US midterm election outcome. For India, which imports a large share of its crude requirements, cheaper oil can reduce the import bill, ease inflationary pressures and lower costs for businesses. Airlines, in particular, stand to benefit from lower fuel expenses.

The election results have also raised expectations that a shift in congressional control could constrain President Donald Trump's ability to push aggressive trade and tariff measures. Any reduction in policy uncertainty could improve sentiment towards emerging markets, including India. However, the impact will depend on how US trade policy and geopolitical developments unfold.

Foreign investor buying has added to the momentum. Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said foreign institutional investors (FIIs) bought equities worth Rs 20,834 crore in the cash market over the last four trading sessions, with buying volumes steadily increasing.

He attributed the change in sentiment to falling crude prices, the resilience of the Indian economy and improving corporate earnings. He also said expectations of a possible abolition of long-term capital gains (LTCG) tax in the next Union Budget had influenced the FII stance. This, however, remains an expectation and not an announced policy decision.

BROAD-BASED BUYING

The buying was widespread in early trade. IndiGo led the Sensex gainers, rising 5.07%, followed by Bajaj Finance, up 4.63%, and Asian Paints, which gained 4.18%. Mahindra & Mahindra and Maruti Suzuki advanced 3.84% and 3.71%, respectively.

Banking heavyweights also traded higher, with HDFC Bank gaining 2.57% and ICICI Bank rising 2.46%. Larsen & Toubro, UltraTech Cement, Infosys and other major stocks were also in positive territory.

Among sectoral indices, Nifty Auto gained 2.04%, Nifty Realty rose 1.94%, and Nifty Financial Services ex-Bank advanced 2.72%. IT, media, metal and FMCG stocks also traded higher. The broader market participated, with the Nifty 500 up 1.32%.

WILL THE RALLY LAST?

Vijayakumar said the bullish trend could continue as economic conditions improve. He expects further short-covering in large-cap stocks, particularly banking and financial companies. Short-covering happens when traders who have bet on falling prices buy back shares to close their positions, adding to upward momentum.

However, he cautioned that gains could be capped by profit booking at higher levels, with domestic institutional investors showing an inclination to sell on rallies. He also warned that prolonged political conflict in the US could weaken the initial positive reaction to the midterm results.

Dr Ravi Singh, Chief Research Officer at Master Capital Services Ltd, said the US election outcome could support foreign inflows into Indian equities if it reduces global trade uncertainty.

For now, cheaper oil and renewed FII buying are providing the strongest support to the market. Whether the rally sustains will depend on crude prices, foreign fund flows, corporate earnings and the course of geopolitical developments.

- Ends