Sensex and Nifty Rally Over 2.6% on April 1 on Middle East Optimism and Value Buying
The market saw a strong rally on April 1, supported by hopes of an end to the Iran war and increased value buying.
“Sensex and Nifty ended a two-day losing run and rose over 2.6% on April 1. Investors were encouraged by hopes of a possible de-escalation in the Middle East conflict, which reduced concerns about rising oil prices and global inflation.”
“The markets began FY27 on a positive note, with the Sensex gaining nearly 2,000 points. Strong buying momentum across sectors helped lift investor sentiment.”
At 11:03 am, the Sensex was up 1,407.78 points or 1.96% at 73,355.33, and the Nifty was up 414.40 points or 1.86% at 22,745.80. About 3,457 shares advanced, 338 shares declined, and 79 shares were unchanged.
The Nifty and Sensex lost more than 11% each in March, their worst monthly performance in six years, as elevated crude prices linked to the Iran war weighed.
Key factors behind market rally
Geopolitical concerns ease
US President Donald Trump said Washington could end its military attacks on Iran within two to three weeks, adding that Tehran would not need to strike a deal as a prerequisite for the conflict to wind down.
Brent crude oil prices slipped to $105 a barrel, and Asian markets climbed 3.7% on optimism that the month-long conflict could end soon.
“There are indications of de-escalation of the war from the statements issued by the Iranian authorities. Iranian president’s ‘openness to ending the war’ and confirmation from the Iranian foreign minister that ‘messages were exchanged with the U.S.’ indicate that the war might end soon. This view is getting reflected in declines in crude prices and US bond yields. The market might start discounting de-escalation earlier than the event.
“In the March series, the Bank Nifty suffered the worst cut with a crash of around 17 %. This segment holds the promise of sharp recovery when the market bounces back. Leading private sector bank has been beaten down on non-fundamental issues. For long-term investors, this presents a buying opportunity. Many stocks across sectors were marked sharply down on March 30th due to selling triggered by tax harvesting. These stocks are due for a rebound today,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
Value buying
Value buying emerged in Indian markets as investors found the levels attractive after a massive two-day fall.
All 16 major sectors logged gains on April 1. The broader small-caps and mid-caps advanced 3.5% and 3.2%, respectively. Bank Nifty rose 1.8%.
“Momentum in markets is largely being driven by a decisive improvement in global risk sentiment, following encouraging signals around potential de-escalation in the ongoing West Asia conflict,” said Hariprasad K, research analyst and founder of Livelong Wealth.
Signs of stability in the Middle East are supportive for India, given its reliance on energy imports.
IndiGo was the top gainer among the Nifty 50 constituents by rising over 8% on naming ex-British Airways chief William Walsh as new CEO. Trent was the next biggest gainer among the Nifty 50 constituents, up over 6%. The stock gained after falling for the previous two sessions. It was followed by Adani Enterprises, which climbed 5.8%, and Bharat Electronics, up over 5.5%. Shares of Bharat Electronics rose after the company received orders worth Rs 6,795 crore.
All the defence sector stocks rose in early trade, with Garden Reach Shipbuilders & Engineers and Cochin Shipyard being the top gainers. Garden Reach Shipbuilders was up almost 16%, while Cochin Shipyard gained 12%.
Shares of Coforge rose nearly 5% after the Reserve Bank of India gave the nod for overseas investment under Foreign Exchange Management Act rules. Avenue Supermarts rose nearly 7% on news of the company opening 12 new stores.
India VIX declines 10%
The volatility index fell 10% to 25.1 after hovering near its highest since June 2024 over the past two weeks.
“A decline toward the 22 zone would indicate unwinding of fear-driven positions and a normalisation in market conditions,” Hariprasad said.
Technical View
“Fresh long positions should preferably be initiated only after the Nifty convincingly breaks above and sustains the 24,000 level, which would indicate improved sentiment and the likelihood of a more durable bullish trend,” said Hitesh Tailor, Research Analyst, Choice Broking.
