The Indian stock market traded sharply higher on Monday, with the Sensex and Nifty rising around 1% each, as US President Donald Trump said talks with Iran would take place today, triggering a sharp fall in oil prices and boosting investor sentiment on Dalal Street.
IndiGo, ITC, Bajaj Finance, Bajaj Finserv, TCS, Eternal, Infosys and L&T were the top gainers on the Sensex, rising up to 3%. Sun Pharma, however, was the only loser, falling nearly 2%.
Among sectors, Nifty FMCG, Nifty Metal and Nifty Financial Services, excluding banks, jumped over 1% each to lead the gains. Nifty Pharma and Nifty Consumer Durables, however, slipped into the red. Overall market breadth remained bullish, with 2,203 stocks advancing on the NSE against 446 declines, while 110 remained unchanged.
Here are 6 key factors driving Dalal Street higher today:
1) Trump hints at Iran-US war talks
US President Donald Trump said talks with Iran would take place on Monday, but declined to set a deadline for an agreement. Late on Saturday, he said on his Truth Social platform that Iran and other Middle Eastern countries had sought time to finalise an agreement that would result in "the Immediate, Complete and Total" reopening of the crucial waterway and bring "an end to Iran's nuclear threat". Trump added that he had agreed to cancel the attack to allow for a rapid agreement, and said Israel had also committed to the effort.
This comes after weeks of escalating tensions in the Middle East made an interim peace agreement futile, rattling global markets.
As a result of the latest developments in the Middle East, oil prices sharply tumbled around 5%. Brent crude futures fell below $84 per barrel while WTI Crude futures were down to $80 per barrel.
On Sunday, OPEC+ approved an increase of approximately 188,000 barrels per day in its oil production quota for September, marking the completion of one tranche of its voluntary output cuts.
Asian tech-heavy stock markets dropped on Monday, with South Korea’s Kospi plunging 5% after a record rally in the previous session. Japan’s Nikkei also declined around 1%. Dalal Street’s rise against an overall downtrend in Asian markets has been noted recently, with analysts highlighting that India has likely become a strong anti-AI allocation, boosting Indian equities during a time global investors are massively offloading AI stocks.
As many as 573 companies are set to announce their earnings for the April-June quarter (Q1 FY27) this week, with notable names including Westside and Zudio-parent Trent, public lender SBI, ecommerce major Nykaa, telecom giant Bharti Airtel, Titan and others. “The Q1 results declared so far also have surprised a bit on the upside. If this trend sustains, FY 27 earnings growth can be better than initial expectations,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments
Foreign investors remained net buyers of Indian equities for the past three consecutive sessions, after a five-day long selling streak. Overall during the month, foreign investors mostly remained bullish on Dalal Street as global tech rout may have dampened sentiment for other markets.
“A significant recent trend is the FPIs buying into Indian mid and small cap stocks. The high growth potential of this segment is the principal reason for the increasing FPI allocation to these segments,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
US Treasury yields dropped, further boosting equity market sentiment. The yield on benchmark US 10-year notes fell to 4.698% while the 30-year bond yield fell to 5.24%. The yield on 2-year notes, which typically moves in step with Fed interest rate move expectations, reduced to 4.25%. Falling bond yields typically make bonds less attractive to investors, which in turn can lead to some uptrend in markets.
What lies ahead?
The decline in Brent crude to below $84, the good progress in monsoon in July, and FIIs turning buyers are positive triggers for the market, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments. He noted that a significant trend in the economy is that growth has been resilient despite the many headwinds that the economy has been facing. The fiscal and monetary stimulus given in 2025 is acting with a lag to sustain the growth momentum in the economy.
“The better-than-expected credit growth, now running above 18%, and the sustained growth in auto sales numbers are good indicators of the growth momentum in the economy. The Q1 results declared so far have also surprised a bit on the upside. If this trend sustains, FY 27 earnings growth can be better than initial expectations. Good inflows through the FCNR (B), ECB and OFCB routes have contributed to stabilising the rupee, which, in turn, is facilitating an FII comeback,” the analyst added.
In brief, Vijayakumar concluded that the current situation favours the bulls of Dalal Street.
Being in the vicinity of the peaks of April, May, and July, Anand James, Chief Market Strategist at Geojit Investments, however, advised investors to expect pullback attempts, making 24,600 the challenge for Nifty to overcome.
“Meanwhile, we feel that the base has shifted to 24,100 region where the 20 and 10 day SMAs converge, and this can be used as a downside marker, while dips are entered, with an eye on 24,800 initially,” he added.
