Nifty, Sensex Up 0.6% Each Tracking Global Markets, Iran Peace Hopes

The benchmark Nifty 50 and the Sensex were trading nearly 0.6 per cent up each tracking the rise in global stock markets. The Nifty traded 142.8 points up at 24,175.55 while the Sensex traded 452.7 points up at 77,470.48.

US President on April 5 said that “great progress” is being made with Tehran towards a “final agreement”. Trump also said that the US will briefly stop the operation to escort ships across the Strait of Hormuz. The Strait of Hormuz bordering Iran and Oman controls nearly 20 per cent of the global oil supply, and been blocked since the beginning of the Iran war in late February, which has triggered a global energy crisis.

Hopes of a peace agreement between US and Iran somewhat lifted oil supply concerns, leading to a fall in crude oil prices. Brent crude oil futures fell over 1.5 per cent to around $108 per barrel, from a high of $114 per barrel in the previous session. The fall in crude oil prices also led to easing of the US dollar, with the dollar index falling to 98.31 against its peers. The Indian rupee also retreated to 95.06 against the US dollar, after touching a fresh record low of 95.40 in the previous session.

The rise in US markets was also led the rise artificial intelligence-driven stocks. “Recent earnings across technology and broader sectors continued to support the rally in US equities. Market focus this week remains on results from major companies including Disney and Uber, while NVIDIA’s Q1 earnings later this month remain a key event for global markets,” Bajaj Broking said in a note.

In domestic markets too, IT and Telecom stocks led gains. The Nifty Midsmall IT and Telecom index gained the most among sectoral indices, rising nearly 2.4 per cent on May 6. The Nifty IT index also rose 1 per cent in early trade.

This was followed by gains in Auto and PSU Bank stocks, with the indices rising 1.70 per cent and 1.60 per cent, respectively. Meanwhile, FMCG stocks were the only outlier, falling 0.40 per cent during the session.

Broader market indices continued to outperform the benchmark Nifty index. Mid-cap stocks rose over 1 per cent while the Small-cap indices rose nearly 0.80-1 per cent.

Market sentiment also improved as foreign institutional investors (FIIs) returned to the market. On May 5, FIIs bought Rs. 3,621 crore worth of equities, while domestic institutional investors (DIIs) bought around Rs. 2,602 crore.

Within the Nifty 50 index, Indigo shares gained the most, rising 3.20 per cent. This was followed by Trent, M&M, Bajaj Auto, Tata Motors, Shriram Finance, and Bajaj Finance, among others. 

Meanwhile, L&T shares fell the most within the Nifty index, falling nearly 3.40 per cent. Losses within the index were followed by Hindustan Unilever, Titan, and Power Grid shares.

“Nifty spot in today's session is likely to trade in the range of 23,900-24,350,” Bajaj Broking added.

FAQs

1. How are global markets influencing the Indian rally?
   Indian markets are tracking a broader rally in Asia and record highs on Wall Street. Strong performance in US tech stocks and robust earnings, such as Advanced Micro Devices (AMD's) Q1 results have led to a supportive backdrop for the domestic equity market.

2. How does oil prices impact Indian stocks outlook?
   India imports nearly 90 per cent of its crude oil requirements. A rise in crude oil prices leads to rise in input cost for most energy heavy sectors, putting pressure on their profit margins.

3. What is the role of Foreign Institutional Investors (FIIs) right now?
   While the market is up today and FIIs have returned to the market, FIIs have been net sellers over the past few months. Investors are watching to see if the cooling of geopolitical tensions can sustainably bring back foreign capital into Indian equities.