Markets Rally for Third Day: Sensex Up 1,000 Points, Nifty Reclaims 25,500 – What Moved The Markets?

The Indian stock market saw strong gains for the third day in a row on Thursday, June 26, with the Sensex and Nifty ending at a nine-month high.Today's rise was driven by gains in Reliance Industries and strong performance in sectors like financials and metals, as easing tensions between Israel and Iran boosted investor confidence.

Adding to the positive mood were falling crude oil prices and the US dollar dropping to its lowest level in three years, which raised hopes of more foreign investment coming into India.

Sensex closed gaining over 1,000 points or 1.21% to close at 83,756, and the Nifty 50 ended up 304 points or 1.21% to 25,549. Both indices are now only about 2.3% below their all-time highs set in September 2024. Nifty Bank index jumped 586 points to close at a record high of 57,207.

Top Gainers And Losers:

Shriram Finance, Jio Financial, Tata Steel, Bharti Airtel, Hindalco Industries, Eternal, Bajaj Finance, etc, were among the top Nifty gainers ending with 2% rise. While Dr Reddy's, Tech Mahindra, Wipro, SBI, Hero MotoCorp, and M&M were among the top Nifty losers today.

Among the top-performing sectors, the Nifty Metal index rose by 2.3%, with all its stocks ending in positive territory. Hindustan Copper and SAIL were among the biggest gainers in this group. The Oil & Gas sector also performed well, climbing 1.86%, as stocks like IOC, BPCL, and HPCL gained around 3% each. Financials and banking stocks saw strong momentum too, driven by gains in HDFC Bank and ICICI Bank.

On the other hand, the realty and media sectors lagged, both slipping by about 1%. Fertilizer-related stocks also came under pressure, with companies like Prestige and UPL among the top losers.
The overall market was fairly balanced, with 1,983 stocks rising and 1,855 falling. The midcap index saw a solid gain of 346 points, ending the day at 59,227, while the smallcap index remained mostly unchanged.

"Nifty has given a decisive move above the recent consolidation on the daily chart, indicating growing optimism among traders and investors. Unprecedented put writing and call unwinding ahead of the NSE monthly expiry also signaled bullish aggression yesterday," said Rupak De, Senior Technical Analyst at LKP Securities.

Key Reasons for the Market Rally:

1. Easing Global Tensions: Tensions between Israel and Iran calmed down, with both countries following a ceasefire for the second day. This helped improve global investor sentiment and encouraged more risk-taking in markets.

2. Drop in Crude Oil Prices: Crude oil prices fell sharply, which gave a boost to sectors that rely heavily on oil, such as oil marketing companies.

3. Weakening Dollar: The US Dollar Index dropped to a three-year low of 97, increasing expectations of more foreign investment flowing into Indian markets.

4. Hopes of US Interest Rate Cuts: President Trump's pressure on the US Federal Reserve raised hopes that interest rates might be cut soon, even though Fed Chair Jerome Powell remains cautious. Weak consumer confidence data from the US also supported expectations of a softer stance from the central bank.

5. Strong Support from Indian Institutional Investors: Despite foreign investors selling around ₹5,670 crore worth of Indian stocks this month, domestic institutional investors stepped in with strong buying, purchasing nearly ₹70,000 crore. Mutual funds alone accounted for ₹36,000 crore of this amount in June, helping keep the market momentum going.

"The benchmark index reflected strong investor confidence, underpinned by the apparent stability of the Middle East ceasefire, which has eased concerns over potential supply chain disruptions. FIIs continued to pare holdings due to the narrowing yield spread between U.S. and Indian 10-year bonds.

DIIs emerged as net buyers, buoyed by improving liquidity conditions and a rebound in domestic consumption. Across the broader market, key sectors such as banking and auto posted notable gains, supported by easing domestic inflation concerns," said Vinod Nair, Head of Research, Geojit Investment.

Technical Outlook:

"The index has broken above the consolidation zone, we continue to maintain our bullish view going forward. With no major resistance until the 25,700-25,750 zone, we expect this rally to extend by another 150-200 points on the upside. On the downside, support is seen around 25,300-25,350," said Rupak De, Senior Technical Analyst at LKP Securities.

Rupee VS Dollar:

The Indian rupee gained 39 paise on Thursday, June 26, closing at 85.70 against the US dollar, compared to 86.09 on Wednesday.

"The Indian Rupee and equities have seen appreciation, largely due to a weaker US Dollar Index and increased dollar inflows through IPOs. The dollar index has plummeted to a three-year low amidst speculation of earlier than expected US interest rate cuts.

This speculation is fueled by reports that US President Donald Trump is actively seeking to undermine the Federal Reserve Chair, potentially paving the way for a more dovish monetary policy. In the near term, the spot USDINR pair is expected to find support at 85.45 and face resistance at 86.27," said Dilip Parmar, Research Analyst, HDFC Securities.