Relief Rally in Indian Markets: Nifty and Sensex Surge as US-Iran Tensions Ease

Indian markets and their Asian peers rebounded sharply on Tuesday, recouping much of their losses from a day earlier, after US President Donald Trump announced a temporary halt to strikes on Iranian energy infrastructure, easing geopolitical concerns.

Indian benchmark Nifty 50 rose 1.78% to close at 22,912.40 after a relief rally and a short-covering on the expiry day. The Sensex 30, too, rose 1.89% to close at 74,068.45 on Tuesday, raising the BSE’s market capitalization by ₹7.56 trillion.

Key Asian Benchmarks

Key Asian benchmarks traded in line with India’s bourses. Japan’s Nikkei 225 index closed 1.4% higher, Hong Kong’s Hang Seng index 2.8%, South Korea’s Kospi index 2.7%, and China’s CSI 300 index was up 1.3%.

Nifty 50 Technical Analysis

The Nifty 50 breached the 22,735 technical resistance level, signalling near-term strength. On Monday, the index had closed at 22,512.

According to Rajesh Palviya, senior vice president (research) at Axis Securities, “This opens the door for the market to test the next resistance level of 23,512 by month-end, provided no negative news crops up.”

Broader Indian Indices

Broader Indian indices also did well, the Nifty Midcap index closing 2.6% higher and the Nifty Smallcap, 2.4%.

Crude Oil Prices

Lower crude prices may have also led to the relatively stable markets today, said Srikant Chouhan, head of equity research at Kotak Securities. For the second day running, Brent crude traded below $100 per barrel, and was at $98.15 as of 18:02pm. Crude oil has surged 32% since the war began.

Gold Prices and Rupee

Meanwhile, MCX gold price surged by 2.19% on Tuesday. The rupee, which has depreciated 3.09% since the war began, appreciated by 10 paise to 93.88.

Foreign Institutional Investors (FIIs)

Foreign Institutional Investors (FIIs) net sold shares worth ₹8,009 crore on Tuesday while DIIs (domestic institutional investors) net bought ₹5,867 crore of equities. FIIs have pulled out ₹90,153 crore from Indian equities this month through Friday (20 March), data from NSDL showed. Notably, the US-Iran war began on 28 February.

Earnings Impact

Near-term earnings visibility for manufacturing companies has been impacted to some extent and is reflected in stock prices. However, most firms have limited direct exposure to the Middle East (typically under 5%) and are adapting to supply disruptions by rerouting shipments via the Cape of Good Hope, said Chandraprakash Padiyar, senior fund manager at Tata Asset Management.

Relief Rally Conditional on Incoming News Flow

According to Siddhartha Khemka, head of research for wealth management at Motilal Oswal Financial Services, the relief rally is likely to remain conditional on incoming news flow and official commentary from both sides, with markets expected to stay sensitive to these cues and volatility likely to persist.

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