Why stock market surged today? Sensex soars 1,000 pts, Nifty over 25,500; 3 key factors behind the rally
Why stock market surged today? Sensex soars 1,000 pts, Nifty over 25,500; 3 key factors behind the rally
Indian benchmark indices ended sharply higher on Thursday, led by gains in financial and metal stocks, amid a weakening U.S. dollar and easing geopolitical tensions in the Middle East.
The 30-share BSE Sensex jumped 1,000 points, or 1.21%, to close at 83,755, while the broader NSE Nifty advanced 304 points, or 1.21%, to end at 25,549.
Meanwhile, the total market capitalisation of all listed companies on the BSE rose by Rs 3.33 lakh crore, reaching Rs 457.33 lakh crore.
The Nifty Metal index rose 2.3%, helped by a weaker dollar, which makes the greenback-denominated assets more affordable to holders of other currencies. The Nifty Bank and Financial Services indices also gained 1% and 1.5%, respectively.
Here are the key factors that drove stock market surge today:
1. Weaken Dollar
Market sentiment was lifted amid U.S. President Donald Trump criticising Federal Reserve Chair Jerome Powell as “terrible” and confirming that he is considering three or four candidates to replace Powell before his term ends in 2026. Media reports suggest Trump may act as early as September or October.
These remarks raised concerns about the Federal Reserve’s future independence and triggered a decline in the U.S. dollar. The dollar index dropped 0.69% to 97.00, while the U.S. two-year Treasury yield fell to a seven-week low of 3.764%.
Traders are now pricing in nearly a 25% chance of the Fed cutting rates in its end-of-July meeting compared to 12.5% last week, the CME FedWatch tool showed.
2. Easing Tensions in the Middle East
Indian markets have been reacting positively since the ceasefire between Israel and Iran, as the geopolitical de-escalation has eased concerns over oil supply disruptions and inflation. As India imports over 80% of its crude oil, a reduction in geopolitical risk supports a more stable inflation outlook and fiscal balance.
3. Oil Prices Drop
Crude prices, which had spiked during the height of the Israel-Iran conflict, have now cooled. Brent crude futures now fell to $67.57 a barrel, while U.S. West Texas Intermediate (WTI) dropped to $64.84.
In mid-June, Brent crude had surged nearly 13%, rising from below $70 to a high of $81.40 on June 23 amid fears that Iran might disrupt shipments through the Strait of Hormuz. The subsequent decline in oil prices has supported Indian equities by easing inflation and fiscal concerns.
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