Indian markets rally as oil prices tumble and US midterms shift Congress to Democrats
The Sensex and Nifty jumped on Thursday after Brent crude fell over 1% and US voters gave Democrats control of Congress, boosting foreign fund inflows and optimism about a possible US-Iran de-escalation.
Indian benchmark indices rose sharply on Thursday, with the BSE Sensex gaining 1,403.71 points to 78,689.87 and the NSE Nifty climbing 378.85 points to 24,340.40. The advance came amid a 1.07% drop in Brent crude, which fell to $93.61 a barrel, and heightened optimism that the West Asia conflict could be resolved following the US midterm elections.
Foreign Institutional Investors purchased equities worth ₹7,284.03 crore on Wednesday, supporting the market surge. Among the Sensex constituents, InterGlobe Aviation, Asian Paints, Bajaj Finance, Maruti, Mahindra & Mahindra and UltraTech Cement posted notable gains, while Kotak Mahindra Bank and Bharti Airtel lagged.
"With tailwinds for the economy getting stronger, the bullish trend in the market is set to continue. The strongest positive for the market is the sharp 10% fall in Brent crude to around $94 level. This decline is on hopes that a resolution to the U.S.-Iran conflict is likely soon since this conflict and the consequent high crude prices contributed significantly to the Republican rout in the midterms," said V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
US midterm results gave the Democratic Party control of both the Senate and the House of Representatives, ending Republican dominance in Congress. The outcomes were seen as reflecting voter sentiment on foreign-policy issues, including the conflict with Iran.
"Wall Street rallied sharply overnight, while the decline in crude and Treasury yields improved the broader risk environment. Brent has fallen almost 10% to around $94.50 as traders removed part of the war premium after signals that political pressure could push the U.S. administration toward negotiations with Iran. Unlike the earlier gradual decline, the magnitude of this move can materially improve India’s near-term macro and earnings outlook if sustained. However, the fall remains driven by expectations rather than a confirmed settlement or full restoration of energy flows, leaving crude vulnerable to any setback in negotiations," said Hariselvan Radhakrishnan, Founder & CEO of HST Wealth.
Asian markets showed mixed performance, with South Korea’s Kospi and Japan’s Nikkei 225 slipping, while Shanghai’s SSE Composite and Hong Kong’s Hang Seng index rose. In the United States, the Dow Jones Industrial Average jumped 3.03%, the S&P 500 rose 1.58%, and the Nasdaq Composite increased 1.44% on Wednesday.
The Sensex closed at its highest level in over two months on Wednesday, up 0.50% to 77,301.40, and the Nifty ended at 23,960.60, up 0.63%. Over the past five trading sessions, the Sensex has risen 5.53% and the Nifty 5.55%.