At 10.24 am, Sensex gained over 900 points to trade at 77,800, while Nifty 50 rose over 250 pts, rising above 24,250 level. The sharp gains added nearly Rs 4 lakh crore to the total market capitalisation of all companies listed on the BSE, taking it to Rs 470 lakh crore.
Maruti Suzuki shares led the Sensex gainers, surging nearly 5% after the automaker’s Q4 results impressed the Street. Mahindra & Mahindra (M&M), Tech Mahindra, ITC, Reliance Industries, Bharti Airtel and Eternal followed, rising 2–3% each. Bucking the trend, Asian Paints and Axis Bank traded marginally lower.
India VIX, which measures volatility in the markets, eased around 6% to 16.97. Broader markets also gained sharply, at par with the benchmarks. Nifty Smallcap 100 and Nifty Midcap 100 indices gained around 1% each. Sectorally, Nifty Auto jumped over 2% to emerge as the top gainer. Around 2,079 stocks advanced on NSE, while 891 declined and 94 remained unchanged.
Here are key drivers behind today’s stock market rally:
1) Strong Q4 Earnings
The sharp rally in the Sensex and Nifty was driven by strong gains in heavyweight Maruti Suzuki. The country’s largest passenger carmaker saw its shares jump 5%, as brokerages remained bullish despite a 7% YoY decline in standalone March-quarter profit to Rs 3,591 crore.
Goldman Sachs maintained its ‘Buy’ rating on Maruti Suzuki with a target price of Rs 15,800. The brokerage said fourth-quarter results were broadly in line with expectations, while domestic volume growth guidance of 10% for FY27 was positive.
Morgan Stanley reiterated its ‘Overweight’ rating on Maruti Suzuki with a target price of Rs 17,895, as it expects near-term outperformance over the next 30 days. HSBC meanwhile maintained its ‘Buy’ rating on Maruti Suzuki with a target price of Rs 15,000.
Eternal shares were also up over 2% after the Zomato and Blinkit-parent reported a 346% YoY surge in consolidated net profit to Rs 174 crore for the fourth quarter.
2) Buying on dip
Sensex and Nifty dropped up to 0.5% on Tuesday, as rising oil prices spooked investors and wiped off most of the gains recorded in the previous session. Prior to that, the benchmark indices had recorded sharp losses for three consecutive sessions, following a massive selloff in March. Hence, markets may be witnessing some value-buying and short-covering today.
Nifty is still around 4% lower than its pre-Middle East war levels of near 25,200. Narendra Solanki from Anand Rathi Shares & Stock Brokers highlighted that Nifty has recovered over 2,000 points from the 22,000 range it was trading in March. “The market has recovered smartly and we just entered with that kind of recovery into the result seasons, and the markets were hoping for the result season to be largely in line,” he told ET Now.
3) U.S. weighs Iranian proposal
Markets are pricing in a sooner end to the raging war in the Middle East, despite some analysts advising caution. The White House is considering an Iranian proposal that would see the US and Iran immediately lift their blockades in the Strait of Hormuz but delay talks regarding Iran’s nuclear program and a larger peace deal, the Wall Street Journal reported.
US President Donald Trump told UK’s King Charles III and other guests at a state dinner on Tuesday that Iran has been “militarily defeated”, in his first public comments on the sensitive topic during the ongoing royal visit. “We have militarily defeated that particular opponent,” Trump said at the White House dinner, adding: “Charles agrees with me even more than I do – we’re never going to let that opponent have a nuclear weapon.”
Trump additionally said that Iran has asked the US to lift a naval blockade of the Strait of Hormuz while the two sides negotiate an end to the two-month war. Meanwhile, Trump has instructed aides to prepare for an extended blockade of Iran, the Wall Street Journal reported late on Tuesday, citing US officials.
Why caution is still warranted?
Despite the renewed optimism, some caution is warranted. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said that although there are important developments happening in the Gulf region, there is no solution to the energy crisis caused by the closure of the strait of Hormuz. “UAE’s decision to quit OPEC might have a bearing on crude prices in the medium term but it is unlikely to ease crude prices in the near-term. There are indications that the US-Iran stand off may continue much longer. Brent crude at $110 is negative for India. As long as crude price remains elevated, the downside risk to India’s growth and the upside risk to inflation will remain high,” he explained.
“The market will also be closely watching the political developments after the state elections end today. The exit polls this evening might give indications of possible outcomes. The Fed decision today will be a pause in the light of the uncertainty surrounding the West Asia conflict and rising inflation. The message from the Fed chief will be more important,” the analyst added.
Oil prices above $110/barrel
Oil prices continue to remain elevated, although they remained marginally in the red. Brent crude futures were trading at around $111 per barrel on Wednesday morning, while WTI Crude futures were hovering around $99 per barrel.
After comfortably falling below the $100 per barrel mark earlier this month, oil prices soared back above the crucial level last week as fresh attacks near the Strait of Hormuz spooked investors about supply concerns.
Global markets mixed
Asian markets remained mixed, with Japan’s Nikkei extending losses and falling another 1% after the Bank of Japan held its policy rate unchanged while raising its inflation forecast amid the raging war in the Middle East. South Korea’s Kospi, meanwhile, gained around 0.3%. Hong Kong’s Hang Seng and China’s Shanghai Composite however rose up to 1%
Wall Street dropped on Tuesday, with Nasdaq falling 0.9%. In Europe, UK’s FTSE closed with marginal gains, while France’s CAC and Germany’s DAX closed up to 0.5% lower on Tuesday.
FII selling continues
Foreign investors continued to remain net sellers of Indian equities, net selling shares worth Rs 2,104 crore on Tuesday, according to provisional data on NSE. While this does not reflect their behaviour today, persistent FII selling dampens investor sentiment.
“It is important to understand the principal reason behind sustained FII selling in India. India underperformed hugely in 2025 and this trend is continuing in 2026, too. S&P 500 set new records this year. Kospi is up 55% YTD, and Taiex is up 35% YTD while Nifty is down 7.8% YTD. The principal reason behind this underperformance is the booming AI trade, which began in 2025 and is continuing this year. A few AI stocks are driving this AI trade globally. Bulk of portfolio flows are hot money that chase momentum. So long as this market momentum continues, FIIs are likely to continue selling,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Rupee weakens
Rupee fell 11 paise to 94.79 against the US dollar in early trade. Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities, highlighted that sustained pressure from rising crude oil prices and continued FII outflows weighed on the currency. Elevated oil prices amid ongoing Middle East tensions are increasing dollar demand from importers and widening India’s trade deficit, keeping the rupee under stress, he added.
“Uncertainty around US–Iran ceasefire developments continues to keep sentiment fragile, with markets reacting to every update on escalation or de-escalation. In the near term, 94.00 is likely to act as resistance, while 95.00 remains the next key support, with the rupee expected to stay volatile and driven by crude and global risk cues,” he explained.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
