A positive sentiment began to emerge in the stock market as falling crude oil prices and bond yields stimulated risk-on moods on Dalal Street. Investors actively bought shares after both major indices had been in a consolidation phase for a long time, during which they lost almost 5 percent.
During Monday's trading, the BSE Sensex barometer rose by 692 points, which is 0.93 percent, reaching the level of 74,987. Consequently, the NSE Nifty 50 index increased by 120 points or 0.51 percent, reaching 23,467.
Analysts from SBI Securities noted that the gradual decline in crude oil prices over the last four trading sessions brought some relief to Asian stocks and improved risk sentiment, despite persistent geopolitical tensions in West Asia.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments, added that investor confidence is being built due to steady growth in developed economies and expectations of good corporate profits both globally and in India.
Key Factors Driving Stock Market Growth
Falling Oil Prices
Crude oil prices fell for the fourth consecutive day, which helped reduce concerns about inflation and current account deficits. The price of Brent crude fell to $101 per barrel from $XX last week. The main stimulus was the easing of concerns regarding supplies from Saudi Arabia, as the kingdom began directing additional shipments to Asian buyers through ship-to-ship transfers near the Strait of Hormuz, and the increased loading calmed fears of a complete export halt following the pipeline attack.
Rajiv Sharan, Head of Research at Brickwork Ratings, emphasized that this is a positive development for India, a major importer. A softer oil account reduces pressure on the import bill, the rupee, and imported inflation, providing some respite to the current account. However, he warned that this is more of a relief than a reversal, as Brent remains above $100, and the geopolitical risk premium persists, meaning any new escalation could quickly reverse the decline.
Lower Bond Yields
The yield on 10-year US Treasury bonds fell by approximately 3 basis points to 4.97 percent at the start of the tense week, as several Federal Reserve officials plan to provide guidance on monetary policy outlooks. The drop in oil prices also contributed to the fall in yields.
Low US bond rates are beneficial for emerging markets like India as they ensure rupee stability and reduce capital outflow risk. Last week, this benchmark yield sharply rose to a 19-year high after the Fed raised interest rates.
Support from Global Markets
Global markets demonstrated growth, and this positive sentiment was reflected in Indian markets. In Asian markets, South Korea's KOSPI index rose by 1.62 percent, and Hong Kong's Hang Seng index increased by 1.04 percent. Chinese markets also showed growth, with the Shanghai Composite rising by 0.96 percent.
US stocks also looked positive: S&P 500 futures rose by 0.6 percent, and Nasdaq 100 contracts climbed by 0.8 percent amid the rise in technology stocks.
Technical Analysis of the Technology Sector
Shrikant Chauhan, Head of Equity Research at Kotak Securities, noted that technically, Nifty formed a bearish candle on the weekly chart and continues to support the formation of a lower high on the daily chart, indicating a weak short-term trend. Nevertheless, the market is currently in an oversold zone, increasing the probability of a sharp recovery rally from current levels.
In his view, key support levels for traders may remain at 23,200/74,000 and 23,150/73,700. He added: 'As long as Nifty holds above these levels, a pullback to 23,500/74,700 cannot be ruled out. A decisive breakout above 23,500 could further extend the recovery towards 23,600–23,700/75,000–75,300.'
