Domestic equity markets showed early trade gains on Tuesday amid optimism for reduced tensions in West Asia following US President Donald Trump’s hint at a potential nuclear agreement with Iran. The Sensex climbed 368 points to reach an intraday high of 75,683, while the Nifty traded at 23,758, up by 110 points. Notably, IT stocks led the surge, with the Nifty IT index rising by 4%, and the Nifty MidSmall IT & Telecom index advancing nearly 3%.
Sector-wise, the Nifty Chemicals index also saw a rise of 1.16%, while the Nifty Private Bank index slipped by 0.11%. However, Nifty Auto and Nifty Metal indices experienced marginal declines. Among individual stocks, Hindalco Industries saw the most significant drop of over 1%, followed by Coal India and ONGC, which traded lower by 0.93% and 0.81% respectively. Titan Company, Kotak Mahindra Bank, and Eternal also registered slight decreases.
Analysts noted that concerns over high valuations in global AI-related stocks were prompting investors to explore comparatively attractive segments in India. They highlighted the potential outperformance of large-cap financials, especially leading banks, due to their reasonable valuations and growth prospects. Additionally, they recommended focusing on sectors like pharmaceuticals, power-related companies, and defense stocks, which are less vulnerable to prevailing economic challenges.
Commenting on earnings, analysts observed that fourth-quarter results were positive and, in many instances, exceeded expectations, indicating a recovery in the economy due to last year’s fiscal and monetary stimulus measures. They emphasized that a swift resolution of the Strait of Hormuz crisis could expedite economic recovery and mitigate the anticipated slowdown this year. Market sentiment was bolstered by President Trump’s decision to halt a planned attack on Iran, citing a peace proposal from Tehran and expressing optimism about a potential deal on Iran’s nuclear program.
In the commodity markets, oil prices saw a decline, with Brent crude dropping by 2.74% to $109.02 per barrel, and US WTI crude trading 2.16% lower at $102.12 per barrel. Across Asia, markets exhibited mixed trends, with Japan’s Nikkei and South Korea’s KOSPI declining by up to 3%, while Hong Kong’s Hang Seng recorded marginal gains. In the US, the S&P 500 closed nearly flat, down by 0.07%, while the Nasdaq fell by 0.51%.
