Dalal Street takes cues from Don, sensex up 640 points

MUMBAI: Stocks reversed two consecutive sessions of strong sell-offs on Tuesday after traders interpreted statements made by US President Donald Trump early in the day as an indication that the war in West Asia may end soon, slowly bringing back supply chains in the region to normalcy. As a result, sensex rallied 640 points or 0.8% to close at 78,206 points while Nifty on NSE ended 234 points or 1% up at 24,262 points.

After Trump, during a press conference, indicated that a solution to the turmoil could be reached soon in West Asia, US markets reversed early losses and closed higher. On Tuesday, Asian markets, including in India, picked up cues and rallied. European and the US markets also showed gains in late and early trades respectively.

The direction of crude prices on Tuesday was one of the strongest indicators that something positive could be in store between the US-Israel combine and Iran.

Brent crude, after hitting a multi-year high at almost $120/barrel last week, was trading at just above the $85 mark on Tuesday.

According to Vinod Nair, head of research, Geojit Investments, Dalal Street mirrored the improvement in global sentiment after the sharp decline in crude oil prices, following comments from Trump hinting at a possible end to the war. “However, elevated levels of India VIX continued to signal underlying uncertainty in the market,” Nair said.

“In the near term, markets are likely to remain in the woods, with investors closely monitoring signs of geopolitical de-escalation. Greater clarity could trigger value buying in sectors that have been most affected by the recent volatility.”

In addition to rising India VIX, market players also pointed out that foreign funds were net sellers on Tuesday, taking out Rs 4,673 crore, BSE data showed. The day’s rally added nearly Rs 6 lakh crore to investors’ wealth with BSE’s market capitalisation now rising to a little over Rs 447 crore.

Of the 30 sensex stocks, 24 closed with gains. Among the gainers, ICICI Bank, HDFC Bank and M&M contributed the most.