The Indian stock market saw strong buying interest in morning trade on Tuesday, March 24, with the benchmarks — Sensex and Nifty 50 — rising 2% each.
BSE barometer Sensex jumped more than 1,500 points, or 2%, to open at 74,212, while the Nifty 50 rose by 400 points, or nearly 2%, to hit the day’s high of 22,900. The BSE 150 Midcap index and the BSE 250 Smallcap index added more than 2% each in intraday deals.
Investors earned ₹5 lakh crore within minutes as the cumulative market capitalisation of BSE-listed firms rose to nearly ₹420 lakh crore from ₹415 lakh crore in the previous session.
Why is the stock market rising?
Let’s take a look at 4 key factors behind the stock market rally.
1. Trump’s comments ease Middle East tensions
US President Donald Trump’s comments that Washington and Tehran are engaged in talks to finalise a comprehensive resolution of the Middle East conflict eased one of the biggest concerns for global stock markets.
Trump said on March 23 that over the last two days, Iran and the US have had “very productive conversations regarding a complete and total resolution of hostilities in the Middle East”.
Meanwhile, Israeli media reported on March 23 that the US has set 9 April as a potential date to end the ongoing war against Iran.
Trump’s softer tone on Iran and positive news flows indicating the end of the war could be near boosted market sentiment.
2. Positive global cues
The domestic market is mirroring trends in other major Asian markets. Key indices in Japan, Korea, and China rose by up to 2% during the session following a solid more than 1% gain in the S&P 500 and Nasdaq overnight.
The rally in global markets was fuelled by Trump’s remarks that the US military will postpone planned strikes on Iran’s power and energy infrastructure by five days after discussions with Iranian officials.
3. Short covering
Market participants appear to be engaged in short covering on the expiry day of the March futures and options (F&O) series amid signs of easing geopolitical tensions.
On Monday, the 22,000 strike, followed by 22,500, held the maximum Put open interest, suggesting these levels may act as key support for the Nifty.
The Nifty has rebounded from its previous session close at 22,512.
“On the downside, the 22,500–22,400 zone continues to act as a strong support base. Any pullback towards this region is likely to attract buying interest,” said Ponmudi R, CEO of Enrich Money- a SEBI-registered online trading and wealth tech firm.
“The short-term outlook has turned positive, indicating the potential for a relief rally. However, the broader structure remains cautious, and confirmation of strength will require sustained price action above key resistance levels,” Ponmudi added.
4. Rupee rises
According to Bloomberg data, the Indian rupee opened 34 paise higher at 93.63, up from its previous close of 93.97, amid easing concerns over the Middle East conflict.
Rupee’s weakness has perhaps been the biggest factor accelerating foreign capital outflows from the Indian stock market.
While several other factors will matter, if the domestic currency strengthens further, it could trigger a trend reversal in FII sentiment toward Indian equities.
“A major drag on the market now is the huge selling by FIIs despite the sharp correction in the market. The rupee’s continued weakness is the main factor behind sustained selling by FIIs. Therefore, if some sort of stability is to emerge in the market, the rupee should stabilise first,” VK Vijayakumar, Chief Investment Strategist, Geojit Investments, noted.
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Disclaimer: This story is for educational purposes only. 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.
