Nifty 50 Surge: US-Iran De-escalation Hopes Fuel 780-Point Rally in Two Sessions

Nifty 50 Rebounds on Easing War Concerns

The Nifty 50 has staged a sharp rebound, gaining 794 points (3.52%) to reach 23,306 over the last two trading sessions, recovering a significant portion of its recent losses. This comes on the heels of US President Donald Trump's remarks suggesting a potential end to the war, boosting demand for riskier assets.

Despite the recovery, the index is still down 7.5% so far in March, marking its steepest monthly decline since March 2020, when it fell 23.25%. If the index closes the current month in the red, it will mark its fourth consecutive monthly loss, a scenario last seen between October 2024 and February 2025.

Key Drivers

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The war concerns have weighed on sentiment, prompting overseas investors to turn net sellers throughout March, withdrawing ₹1.12 lakh crore so far, as per NSDL data. The outflows have not only impacted equities but have also put pressure on the rupee, which slipped to an all-time low of 94 against the US dollar.

Risks and Challenges

India remains highly vulnerable to rising crude oil prices, as it imports nearly 85% of its oil requirements. A sharp spike in prices could fuel inflation and dent the earnings of companies that rely heavily on crude oil as a key raw material, while also prompting the RBI to hike interest rates.

Market Outlook

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Analysts believe the sustainability of the current recovery will depend on how the war shapes up in the coming weeks. Siddhartha Khemka, Head of Research, Wealth Management at Motilal Oswal Financial Services, noted that the ongoing recovery is likely to remain fragile and contingent on further clarity around geopolitical developments.

Volatility Remains Elevated

Bajaj Broking stated that volatility is expected to remain elevated in the near term due to uncertain global cues, firm crude oil prices, and ongoing geopolitical tensions. Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth, noted that the current upmove lacks strong institutional conviction, with the India VIX holding above the 24 mark.