New Delhi/Alive News: Indian stock markets witnessed a strong recovery after US President Donald Trump announced a two-week ceasefire with Iran. The development boosted investor confidence and eased concerns over a prolonged disruption to global oil supplies.
On Wednesday, April 8, the Sensex opened more than 2,500 points higher, while both the Sensex and Nifty gained over 3.5% during early trading. Investors added around ₹15 lakh crore to the combined market capitalisation of BSE-listed companies within an hour.
The rally helped Indian markets recover nearly 65% of the losses suffered since the latest US-Iran conflict began on February 28.
Markets Recover After Ceasefire Announcement
According to market data, the total market capitalisation of BSE-listed companies stood at ₹46.33 lakh crore before the conflict on February 27. It fell to ₹41.16 lakh crore on March 30.
By April 7, the figure had recovered to ₹42.93 lakh crore. On April 8, it climbed further to ₹44.51 lakh crore by 1:09 pm.
This means the market recovered approximately ₹3.36 lakh crore of the ₹5.17 lakh crore lost during the decline.
Three Reasons Behind the Market Rally
1. US-Iran Ceasefire: The two-week ceasefire announcement reduced fears of further military escalation. Iran also agreed to allow vessels to pass through the Strait of Hormuz, an important route for global oil supplies.
2. Falling Crude Oil Prices: Brent crude prices dropped nearly 14% following the announcement and fell below $95 per barrel in early trading. Lower oil prices are positive for India because the country depends heavily on imported crude oil.
3. Improved Global Sentiment: Stock markets across Asia, Europe and the US also gained as investors became more willing to take risks following the diplomatic development.
Sectors and Rupee Gain
Lower crude oil prices supported shares of oil marketing companies, paint manufacturers and tyre companies. The Indian rupee also strengthened, while bond yields eased as concerns over energy-driven inflation declined.
Market sentiment will depend on whether the ceasefire continues and the Strait of Hormuz remains open. Any fresh escalation could bring volatility back to the stock market.
