In keeping with the impressive rally witnessed across global markets, India's equity benchmark indices Sensex and Nifty rose nearly four per cent on Wednesday, as Dalal Street welcomed the two-week ceasefire between the US and Iran announced by President Donald Trump and the decision by the Reserve Bank of India to keep the policy rate unchanged at 5.25 per cent.
The 30-share BSE Sensex jumped 2,946.32 points to settle at 77,562.90, while Nifty surged 873.70 points to 23,997.35 at the end of the trading day. InterGlobe Aviation, Larsen & Toubro, Axis Bank, Bajaj Finance, Maruti, UltraTech Cement and Mahindra & Mahindra were among the top gainers from the Sensex pack.
The broader markets too performed in tandem with Sensex and Nifty, rising nearly four per cent or more. IT and Pharma, meanwhile, were the laggards.
The improved investor sentiment is also due to the decline in the 10-year bond yield and strengthening of the rupee. The fall in oil prices after the US and Iran agreed to the ceasefire that includes the reopening of the Strait of Hormuz, too, contributed to the market optimism.
In the morning, the market volatility plunged 19 per cent to 19.90 as all sectoral indices were in green.
"The key trigger is the announcement of a two-week pause in US military action, alongside Iran's agreement to facilitate safe passage through the Strait of Hormuz. This has significantly reduced immediate concerns around energy supply disruptions, which had been a major overhang for global markets," news agency PTI quoted Hariprasad K, Research Analyst and Founder, Livelong Wealth, as saying.
According to V.K. Vijayakumar, Chief Investment Strategist, Geojit Investments, the announcement of a ceasefire has altered the near-term market scenario.
"The crash in Brent crude to $95 following the ceasefire will again turn the market bullish. This ceasefire, particularly the agreed reopening of Hormuz Strait, will embolden the bulls to charge again, aided by the fair market valuations,” The Economic Times quoted him as saying.
In Asian markets, South Korea's benchmark Kospi surged nearly 7 per cent and Japan's Nikkei 225 index jumped over 5 per cent. Shanghai's SSE Composite index and Hong Kong's Hang Seng index also recorded sharp rallies.
