MUMBAI: The Sensex staged a strong recovery on Thursday, rising about 900 points to close at 80,016, reversing part of the steep 2,300-point decline seen over the previous two sessions following the outbreak of conflict in West Asia.
The benchmark index began the day on a positive note after strong cues from U.S. markets, opening more than 400 points higher. Although trading remained volatile through much of the session, the market gained momentum in the final hour, touching an intraday high of 80,304 before settling slightly lower.
The late surge came after Iran’s foreign minister indicated in a media interview that Tehran was open to negotiations with the United States regarding its nuclear programme, raising hopes of easing tensions in the region.
Earlier in the day, sentiment improved after Washington announced insurance guarantees and security arrangements for ships operating in the conflict zone, helping reduce concerns over disruptions to global energy supplies.
Mirroring the Sensex rally, the Nifty on the National Stock Exchange climbed 285 points, or 1.2%, to end at 24,766. The rebound added nearly ₹5.7 lakh crore to investor wealth, taking the total market capitalisation of BSE-listed companies to about ₹452.9 lakh crore.
Siddhartha Khemka, Head of Research – Wealth Management at Motilal Oswal Financial Services, said investor confidence strengthened following indications of improving geopolitical conditions.
He noted that the U.S. move to ensure insurance and possible military escort for commercial vessels moving through the Strait of Hormuz boosted market sentiment, as the route handles roughly 20% of the world’s daily crude oil shipments from Gulf producers.
Since hostilities began on February 28, Iran’s restrictions on traffic through the vital passage have pushed global crude prices up by more than 10%.
Khemka added that reports suggesting Tehran may be considering potential terms to end the conflict with the U.S. and Israel also supported the market’s recovery, although uncertainty in the region remains.
Market participants said the near term trajectory of equities will depend on developments in the West Asia conflict, crude oil price trends, the rupee’s movement against major currencies, and foreign investment flows.