Sensex, Nifty Rebound Amid Easing Geopolitical Tensions

Domestic equity markets halted their five-day decline on Monday, bolstered by a reduction in geopolitical tensions following Israel’s measured retaliatory actions against Iran. This easing led to a dip in oil prices and sparked buying interest in ICICI Bank.

Positive earnings from ICICI Bank, the country’s second-largest private sector lender, significantly influenced the benchmark indices, enabling the Sensex to enjoy its best performance in two weeks.

During intra-day trading, the Sensex surged by 1,138 points, or 1.43%, reaching 80,540. However, it later retraced some gains due to profit-taking, closing at 80,005, up 603 points or 0.76%, marking the highest close since September 26. The Nifty 50 index finished at 24,339, with a gain of 158 points or 0.65%, representing its best single-day increase since October 14. Both indices had previously recorded losses over the last five sessions due to persistent selling by foreign investors, who sold shares worth ₹3,228 crore on Monday, bringing the monthly total to ₹92,000 crore.

ICICI Bank saw a rise of 2.96%, contributing significantly to the gains of both the Sensex and Nifty. The bank reported a 14.5% year-on-year increase in net profit for the July–September quarter, reaching ₹11,746 crore, supported by strong growth in non-interest income, fee income, and treasury gains. This exceeded Bloomberg’s analysts’ expectations of ₹10,952 crore.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the trend of investors seeking quality stocks is likely to persist, particularly with favorable results from major banks like ICICI Bank and HDFC Bank, which maintain reasonable valuations.

The market had been in a downward trend for the past four weeks, driven by continued selling from foreign portfolio investors (FPIs) and disappointing earnings from major companies, compounded by concerns over high valuations.

Investor sentiment improved as Israel’s strikes against Iran avoided targeting nuclear and oil facilities, contributing to a 6.3% decline in Brent crude prices, which fell to $71. The price had previously surged over 4% to $76 per barrel amid escalating tensions.

Vijayakumar remarked that the global market dynamics could improve following the restrained Israeli actions, while uncertainty surrounding the upcoming U.S. presidential elections may continue to affect market performance.

The direction of the market in the near term will hinge on forthcoming corporate earnings, macroeconomic data from the eurozone and the U.S., and the outcome of the U.S. elections.

Siddhartha Khemka, head of research and wealth management at Motilal Oswal Financial Services, expressed expectations for the upcoming week to remain sideways amid mixed Q2 results, monthly F&O expiry, and ongoing selling by FPIs.

Market breadth was positive, with 2,524 stocks advancing compared to 1,475 declining on the BSE. Alongside ICICI Bank, M&M and Infosys also contributed to the Sensex’s gains.

Other notable performers included Shriram Finance, which rose 5.4% following strong profit results, and Sun Pharma, which climbed 2.3% after exceeding analysts’ profit estimates.

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