HDFC Bank, L&T Among Top Contributors to 3.5% Two-Day Rally in Nifty 50 Index

Market Report: Indian Stocks Rally Amid Easing Middle East Tensions

Key Figures:

• Brent crude oil prices: down 7% to slip below the $100 mark
• Nifty 50: rose 1.72% today, taking the two-day rally to 3.5%
• Shriram Finance: added almost 10% during the two-day rise
• InterGlobe Aviation: rebounded 9% in the last two days
• Larsen & Toubro (L&T): gained over 9% in just the last two sessions
• Bajaj Finance: jumped 9% during this period
• Asian Paints: rebounded sharply by almost 8%
• Eternal: gained 7% after announcing a platform fee hike
• HDFC Bank: reversed their trend after falling for four days
• Reliance Industries: rose just 1.61% during this period

Market Analysis:

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A relief rally is underway on Dalal Street as tensions in the Middle East show signs of easing. The shift in sentiment follows comments from US President Donald Trump, who said Washington was making progress toward ending the conflict. However, Iran's military has denied that any talks have taken place. The softer geopolitical tone has pushed crude oil prices lower, easing macroeconomic concerns for India, which is the third-biggest importer of oil in the world.

The Nifty 50 rose 1.72% today, taking the two-day rally to 3.5%. The rally was broad-based, barring Coal India (down 2%) and Power Grid (up just 0.05%), all index constituents participated in the stock market rebound. Blue-chip NBFC stock Shriram Finance led the charge as it added almost 10% during the two-day rise.

Other notable performers include InterGlobe Aviation, which rebounded 9% in the last two days amid easing of crude oil prices and hopes that a resolution to the war could restore air travel to normalcy. Larsen & Toubro (L&T), which has also taken a heavy beating due to its exposure to the Middle East, gained over 9% in just the last two sessions. Bajaj Finance is also expected to see minimal earnings damage and has jumped 9% during this period.

However, not all stocks performed well. Reliance Industries rose just 1.61% during this period, which was among the bottom five performers, data shows. Asian Paints rebounded sharply by almost 8% as the company announced a 6-8% price hike amid rising raw material costs, as oil prices jumped 60% in March.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Market Outlook:

Analysts remain mixed on the Indian stock market outlook going ahead, with several global brokerages either slashing targets for the benchmark indices or downgrading their outlooks. UBS was the latest to join Citi and Nomura in tempering its expectations for the Nifty 50, downgrading India from 'attractive' to 'neutral'. Meanwhile, Citi cut its target to 27,000 from 28,500, and Nomura cut its year-end target for the Nifty 50 to 24,900 from 29,300 earlier this month amid energy supply risks as the US-Iran war entered its fourth week.

However, Emkay believes that the market has reached its bottom and hence retained its Dec-26E Nifty target of 29,000, based on +1sd PER of 20x. "The short episode is unlikely to derail India’s consumption-led recovery, and we see FY27E Nifty EPSg on track at ~15%."