Sensex jumps over 2,100 points in 4 days; investors earn ₹12 lakh crore; 5 key factors that drove the rally

Mint

4 hours ago

Indian stock market extended gains to the fourth consecutive session on Friday, June 27, with the benchmarks- the Sensex and the Nifty 50- clocking decent gains amid largely positive global cues.
The Sensex closed 303 points, or 0.36 per cent, higher at 84,058.90, while the Nifty 50 settled at 25,637.80, up 89 points, or 0.35 per cent.
The domestic market saw gains across segments as the BSE Midcap and Smallcap indices rose 0.38 per cent and 0.54 per cent, respectively.
The Sensex rose 2,162 points, or nearly 3 per cent, in the last four sessions. The Nifty 50, too, gained nearly 3 per cent in the same period.
The cumulative market capitalisation of BSE-listed firms has jumped to ₹ 460 lakh crore from ₹ 448 lakh crore on Monday, June 23, making investors richer by about ₹ 12 lakh crore in just four sessions.
The Nifty 50 is now just 640 points, or 2.4 per cent below its all-time high of 26,277.35 hit on September 27 last year, while the Sensex is 1,919 points, or 2.2 per cent, below its record high of 85,978.25.
A confluence of factors has driven the recent rally in the Indian stock market. Experts highlight the following five factors that could be behind the stock market's gains in the last four sessions:
A truce between Israel and Iran has significantly improved market sentiment. The Israel-Iran war, which lasted for about 12 days, kept investors on tenterhooks as it had the potential of turning into a major global conflict.
The Israel-Iran war also triggered sharp volatility in crude oil prices, which was a major negative for the Indian economy and market, as the country is one of the largest importers of crude oil globally.
As the July 9 deadline looms, hopes are high that India and the US will finalise a trade deal in the coming days, potentially eliminating a major overhang of tariff uncertainty from the market.
US President Donald Trump on Thursday said that a 'very big trade deal' with India is on the cards as negotiators from New Delhi reached Washington DC, where America has reportedly demanded a few tariff cuts that India is not ready to agree to.
"Key catalysts like the ceasefire in the Middle East and optimism on easing trade tensions ahead of the deadline have cleared the clouds in the minds of investors," said Vinod Nair, Head of Research, Geojit Investments Limited.
The dollar's recent weakness has also influenced domestic market sentiment. The dollar index on June 27 inched closer to its 52-week low of 97 as easing geopolitical tensions weighed on safe-haven demand.
Moreover, concerns over the Federal Reserve's future independence and speculations about rate cuts also pressured the greenback.
The dollar's weakness is positive for the Indian stock market as it increases the possibility of foreign capital inflow into the country.
Meanwhile, the Indian rupee gained 1.3 per cent this week, marking its best performance since January 2023, to close at 85.48 per US dollar on Friday.
"Benign oil prices and a strengthening INR influenced investors to focus on domestic growth themes. Expectations of accelerating earnings, driven by resilient consumption and a relatively stable macroeconomic backdrop, are further reinforcing optimism," said Nair.
"Hopes of a potential relaxation in US tariff deadlines, improved global market sentiments, and easing geopolitical tensions in the Middle East boosted the risk appetite of investors. Additionally, the Indian rupee strengthened against the dollar, further aiding market sentiment," said Vaibhav Vidwani, a research analyst at Bonanza.
With geopolitical headwinds easing, the focus of investors has shifted to domestic fundamentals, which indicate the Indian stock market is poised for healthy gains in the medium term.
India remains one of the fastest-growing large economies in the world. The prospects of an above-normal monsoon mean the growth-inflation dynamics may remain favourable in India.
"Corporate earnings should see an uplift not only from this improving macro setup but also due to the low base of FY25, amplifying growth figures. While some earnings volatility may persist over the next quarter or two, the overall outlook for equities remains positive over the medium term," Vinit Sambre, the head of equities at DSP Mutual Fund, told Mint.
"A combination of supportive factors — including tax benefits, lower interest rates, easing inflation, and a positive agri outlook — will drive a recovery in consumption, which in turn should support corporate earnings growth going forward," said Sambre.
Moreover, a strong influx of retail investors is another key support for the Indian market.
The Nifty 50, which remained in a range since almost the beginning of June, cleared key hurdles in the last few sessions.
Amol Athawale, VP of technical research at Kotak Securities, highlighted that during the week, the market successfully cleared the crucial resistance zone of 25,300/82,700, and post-breakout, it intensified its positive momentum.
"Technically, on weekly charts, it has formed a long bullish candle, which is largely positive. Additionally, it is maintaining an uptrend continuation pattern on daily and intraday charts and is currently trading comfortably above short-term averages, which is also positive," said Athawale.
For trend-following traders, Athawale believes 25,500–25,300/83,300-82,700 would act as crucial retracement support zones.
"As long as the market remains above these levels, the uptrend is likely to continue on the higher side, with 25,850/84400 serving as the immediate resistance level for the bulls. Further upside could potentially lift the market up to 26,000/84,800," said Athawale.
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