Stock Markets Rally by Nearly 4% Due to Ceasefire, Oil Price Plunge, and Positive External Market Indicators

The Indian stock markets recorded a robust performance on April 8, with the indexes rising by almost 4%, following reduced geopolitical risk, the fall in crude oil prices, and external market signs.

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The Sensex soared by approximately 2,800 points, or about 4%, reaching a day’s high of 77,392, whereas the Nifty 50 index climbed by more than 800 points, or 3.5%, to reach 23,939. The midcap and small-cap indexes, which are broad market indexes, also joined the rally, with gains exceeding 4%. The India VIX Index dropped by over 19% to trade below 20.

The total market capitalisation of BSE-listed companies increased to ₹443 lakh crore from ₹429 lakh crore in the previous session, adding ₹14 lakh crore in investor wealth within minutes of trading.

Ceasefire Eases Geopolitical Concerns

Based on Moneycontrol, both the U.S. and Iran have decided to stop their respective military operations for the next two weeks, and at the same time, they have also agreed on safe passage through the Strait of Hormuz, a vital route for global oil.

The news has helped ease fears of supply disruption and boost risk sentiments globally.

Oil Prices Tumble

Crude oil prices were reported to be falling sharply following the ceasefire agreement. They fell below the $95 per barrel mark following the news. The decrease in oil prices means there are fewer worries regarding inflation and increased input costs for the Indian economy.

India imports nearly 85% of its crude oil requirement, making lower oil prices a key positive for domestic markets.
Rupee Strengthens Against Dollar

The Indian rupee strengthened in early trade, rising by 50 paise to 92.56 against the U.S. dollar, according to PTI. The dollar index also declined by over 1% to 98.84.

A higher rupee and lower dollar helped lift sentiments in stocks since the stability of currency plays an important role in foreign investments.

Support from Global Markets

There was a rally in the Asian markets after the ceasefire declaration. The Kospi in South Korea and the Nikkei in Japan increased by 6%.

U.S. markets closed mixed in the previous session, but easing geopolitical tensions contributed to gains across Asian equities.
RBI Policy In Focus

There is no denying that investors are also looking forward to the policy stance adopted by the Reserve Bank of India. The RBI has decided not to change the repo rate of 5.25%. Its policy stance is still neutral.

This sudden rally has been the result of several reasons. These include global happenings, movements in the currency market, and a reduction in volatility.