Nifty 50, the benchmark of the Indian stock market, rose almost 1% in intraday trade on Monday, 27 July, as a sharp fall in crude oil prices after the US and Iran halted their strikes supported sentiment.
The Nifty 50 climbed more than 200 points, or 0.90%, to hit an intraday high of 23,973. The BSE counterpart Sensex jumped over 700 points, or nearly 1%, to 76,768 during the session.
The market rally was not confined to the large-caps only, as the Nifty Midcap 100 and Smallcap 100 indices jumped more than 1% each during the session.
What is driving the market higher?
The biggest boost to market sentiment has come from a sharp fall in crude oil prices. Benchmark Brent crude crashed 7% to fall near $90 per barrel, reducing concerns over inflation and the resulting interest rate hikes by central banks.
Oil prices plunged after the US and Iran halted their military strikes over the weekend, raising hopes for a diplomatic resolution that could pave the way for a final settlement of the conflict and restore the smooth energy supplies through the Strait of Hormuz.
Before Friday, the US military had carried out strikes against Iran for 13 consecutive nights, while Iran carried out retaliatory strikes against Washington’s allies in the Middle East, which drove oil prices back to levels above $100 per barrel.
As per media reports, the US ambassador to the United Nations, Mike Waltz, said that while forces remained “locked and loaded”, US President Donald Trump would give negotiations “a little bit of room”.
“The sharp dip in Brent crude price from $102 four days ago to around $90 this morning is a positive sentiment for the market. If the de-escalation of the West Asia conflict holds and crude price drifts lower, that can sustain a mild rally in the market,” VK Vijayakumar, Chief Investment Strategist, Geojit Investments, observed.
Falling oil prices also supported the Indian rupee, which in turn supported market sentiment.
The Indian rupee rose by 35 paise to 96.18 per dollar in early trade on Monday.
To some extent, healthy Q1 earnings have also supported the market mood.
“The Q1FY27 earnings trend remains encouraging. Despite concerns over higher energy costs, margin compression has not materialised, while revenue growth continues in the mid-teens. This resilience in corporate earnings is a key reason why the broader market has remained firm, unlike the sharp correction seen in March 2026,” Vikram Kasat, the head of advisory at PL Capital, noted.
Can a lasting Middle East peace push Nifty to a record high?
Even as the market faces a plethora of risks, including renewed concerns over Trump tariffs, rising US bond yields, and weakening macroeconomic indicators, the US-Iran conflict remains the biggest headwind at this juncture.
With the US and Iran pausing their strikes and the market rallying sharply, speculation has intensified that a lasting resolution to the conflict could propel the Nifty to a record high this year.
“I think earnings are largely fine. We haven’t seen many negative surprises this earnings season. Foreign portfolio investor (FPI) flows have also improved, and the heavy selling pressure seen earlier has eased. As the dust settles over the Middle East crisis, I believe the markets could perform well. In that scenario, the Nifty touching a new record high would not be a big surprise,” said Pankaj Pandey, the head of research at ICICI Securities.
Pandey pointed out that the biggest challenge remains crude oil, as it puts pressure on the rupee and can stoke inflation concerns.
Beyond that, earnings remain healthy, and capital inflows are supportive. Globally, markets are already adjusting to the broadening impact of the AI theme. Valuations are also at the lower end of their recent range, so they are not a major concern.
“The only thing the market needs is a durable solution to the Middle East conflict. If hostilities stop for a while but flare up again, markets are likely to revert to a wait-and-watch mode rather than sustain the rally,” said Pandey.
Dhiraj Relli, MD and CEO of HDFC Securities, expects FY27 earnings growth to be better than FY26, even though a prolonged US-Iran conflict may trigger cuts in earnings growth estimates.
Relli expects the second half of the current calendar year to be better on improving sentiments, prolonged consolidation and reasonable valuation multiples.
Baldev Prakash, MD and CEO of SBI Securities, expects many sectors to settle with gains, while the Nifty 50 may scale new highs during the fag end of the year, backed by a handsome recovery in heavyweight sectors like banking and IT.
As per brokerage firm PL Capital, India’s long-term structural case due to demographics, domestic capex, financial deepening, supply-chain diversification, and energy security remains intact.
However, in the short term of up to six months, the domestic market may remain range-bound amid high energy prices, rupee weakness, and potential earnings downgrades.
“A staggered deployment approach with emphasis on quality large-cap and large and mid-cap is recommended for the short term,” said PL Capital.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
