​Sensex rises over 150 points, Nifty above 24,200 amid rising Iran-US war peace hopes; broader markets outperform

Stock market indices Sensex and Nifty edged higher in early Friday trade, with midcap and smallcap stocks outperforming, even as sentiment remained fragile despite rising hopes of US-Iran peace talks.

At 9.30 am, Sensex gained over 150 points to 78,149 and Nifty rose over 30 points to trade above the 24,200 mark.

ITC, NTPC, Trent, Maruti Suzuki, Adani Ports, Infosys, Tech Mahindra and Hindustan Unilever were among the top gainers on Sensex, jumping up to 2%. Bucking the trend, Bajaj Finserv, Bharti Airtel, Tata Steel and others declined marginally to lead gains on the index.

Broader markets continued to outperform benchmark indices, with Nifty Smallcap 100 gaining 0.85% and Nifty Midcap 100 index rising 0.5%, while Nifty 50 was up only 0.14%. India Vix, which measures volatility in the markets, edged up slightly by 0.67% to 18.21 in the morning.

Sectorally, Nifty FMCG and Nifty Media gained more than 1% each, while Nifty Metal declined around 0.4%. While 2,100 stocks advanced on NSE, 476 declined and 81 remained unchanged.

Iran-US war to end soon?
The optimism in markets comes amid rising expectations of the raging war between Iran and US ending soon. A 10-day ceasefire between Lebanon and Israel took effect, and US President Donald Trump said that officials from Washington and Tehran may meet for talks on the weekend.

Additionally, Trump said that Iran has agreed not to possess nuclear weapons for more than 20 years, addressing a major sticking point that has been acting as a major obstacle to earlier attempts to establish peace in the region.

"We're going to see what happens. But I think we're very close to making a deal with Iran," Trump told reporters outside the White House on Thursday. US and Iranian negotiators have scaled back their expectations for a comprehensive peace deal and are instead seeking a temporary memorandum to prevent a return to conflict, two Iranian sources told Reuters on Thursday.

Oil prices cool down
Amid the rising expectations of easing conflict and subsequent resumption of trade through the Strait of Hormuz, oil prices cooled down. Brent crude futures dropped more than 1% to trade at $98.31 per barrel in the morning. WTI Crude futures also declined more than 1% to $93.45 per barrel.

After crossing the crucial $100 per barrel mark in March and remaining above that level for the most of the time during that month, oil prices have comfortably fallen below the crucial mark in April so far.

FII remain net buyers
Foreign investors remained net buyers of India equities for the second consecutive session, net purchasing shares worth Rs 382 crore during an extremely volatile session on Thursday. FII have overall bought Indian equities worth more than Rs 1,048 crore during the two days.

However, the last purchases are negligible when compared to the massive selloff seen earlier. FIIs have remained net buyers for only three out of 31 consecutive sessions. They net sold Indian equities worth more than Rs 1.6 lakh crore between March 2 and April 9.

After the massive selloff, it is difficult to say whether yesterday’s slight net buying by foreign investors marked a decisive change in their behavior or just the calm before another storm.

Currency watch
Indian rupee rose 27 paise to 92.87 against the US dollar in early trade. The Indian currency has recovered slightly, after the raging war had sent it to a tailspin, pushing it across the historical mark of 95 against the US dollar before RBI stepped in.

“The gains are largely driven by de-escalation hopes between the US and Iran, which have led to a decline in crude oil prices over the last 48 hours, easing pressure on India’s import bill.
Additionally, FII buying and positive cues from India–US trade engagement are supporting sentiment, as improved capital flows tend to strengthen the currency,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.

He however cautioned that the recovery remains fragile, as markets continue to track geopolitical developments closely, and any reversal in crude could quickly impact the rupee. “Rupee range can be seen between 92.75-93.75,” he said.

Global markets
Asian markets broadly remained in the red, with Japan’s Nikkei and South Korea’s Kospi declining around 1% each. Hong Kong’s Kang Seng fell more than 1%, while China’s Shanghai Composite was down marginally.

On Wall Street, the major indices closed in the green yesterday. Nasdaq gained around 0.4% and S&P 500 rose 0.26%. Dow Jones futures were up marginally on Friday morning. European markets meanwhile closed mixed with marginal gains and losses yesterday.

What lies ahead?
"The resilience of the mother market of the US and positive news relating to the ceasefire between Israel and Lebanon bode well for the market. However, President Trump’s bravado has to be taken lightly, going by his track record of total inconsistency. Investors should be guided by actions rather than words,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

He noted that a significant and distinct trend in the market is the strength of the mid and smallcaps relative to the large caps. “Fear of FIIs again turning sellers on rallies is weighing on large caps. In the near-term, therefore, the broader market may do better aided by the fund flows and retail buying in the segment. However, the prospects of largecaps are better in the medium to long-term. Investors should monitor Q4 results and management commentary to pick stocks in this results season,” he added.