Sensex, Nifty jump: 3 reasons why stock market is rising despite West Asia tensions

Benchmark indices were trading higher on Monday despite renewed geopolitical tensions in West Asia and continued uncertainty around global bond yields and crude oil prices. A sharp fall in crude oil prices, bargain buying after six consecutive weekly declines and gains in heavyweight stocks helped the market absorb the latest geopolitical risks.

At 2:11 pm, the Sensex was up 649.50 points, or 0.87%, at 74,944.46, while the Nifty rose 109.20 points, or 0.47%, to 23,455.60. Both indices were trading above their opening levels of 74,535.18 and 23,330.20, respectively.

The gains came even as tensions involving Iran, the US and the wider Middle East remained elevated. Investors have also been watching the impact of high crude prices and US bond yields, both of which have been major concerns for Indian equities in recent weeks.

The recovery is therefore being driven less by a complete change in the global risk picture and more by a combination of falling oil prices, buying in large-cap stocks and some relief after the recent sell-off.

The biggest immediate positive for Indian markets was the decline in crude oil prices.

At the time of the market snapshot, Brent crude was trading at $101.53 per barrel, down 2.25%, while WTI crude was at $98.10, down 2.19%.

That matters significantly for India because the country imports a large share of its crude oil requirement. A sustained fall in oil prices can reduce concerns around India's import bill, inflation, the current account and pressure on the rupee.

The recent market sell-off had been closely linked to the sharp rise in crude prices as geopolitical tensions raised concerns about supply disruptions. Brent had moved above $100 and had touched much higher levels during the recent escalation.

The decline towards the $100 mark therefore gave investors some breathing room.

Reuters reported that Brent fell more than 2% on Monday as hopes of a recovery in Saudi shipments helped ease some supply concerns. The report also noted that Indian equities were benefiting from bargain hunting and short covering after the market's extended decline.

The key point for investors is that crude has not become cheap again. It remains above $100. But the direction of prices on Monday was favourable for Indian equities.6 WEEKS OF FALLS HAVE CREATED ROOM FOR BARGAIN BUYING

Another important factor is the extent of the recent correction.

Indian equities had gone through six consecutive weeks of decline, with the Nifty and Sensex under pressure from a combination of geopolitical uncertainty, high crude prices, foreign investor selling, elevated global bond yields and concerns around tighter monetary policy.

That prolonged decline has created room for investors to buy stocks that have fallen sharply but continue to have relatively strong earnings prospects.

Monday's move therefore appears to be partly a relief rally rather than a complete reversal of the factors that have been weighing on markets.

Reuters also described Monday's move as being driven by bargain buying and short covering following the recent losses.

This is important because the market is rising even though several of the larger risks have not disappeared.LARGE-CAP STOCKS ARE SUPPORTING THE SENSEX

The gains were also supported by buying across several heavyweight stocks.

At 12:57 pm, UltraTech Cement was the biggest gainer among the Sensex stocks, rising 4.03%. HCLTech was up 3.34%, while Titan gained 2.13%.

Asian Paints rose 2%, Trent gained 1.87% and Sun Pharma was up 1.83%. ITC rose 1.81%, Eternal gained 1.78% and HDFC Bank was higher by 1.70%.

Other major gainers included TCS, Tech Mahindra, Kotak Mahindra Bank, BEL, Hindustan Unilever, Larsen & Toubro, NTPC and IndiGo.

The banking sector was particularly important because gains in large private banks can provide meaningful support to the benchmark indices. HDFC Bank was up 1.70%, Kotak Mahindra Bank 1.17%, ICICI Bank 0.63% and SBI 0.50%.

Reliance Industries was also up 0.61%.

This explains why the Sensex was gaining almost 600 points even though the broader market was not showing the same level of strength.advertisementRALLY IS NOT BROAD-BASEDOne of the more important details from Monday's market action is that the rally has not been equally strong across the market.

At 12:57 pm, the Nifty 100 was up 0.34%, while the Nifty 200 gained 0.21% and the Nifty 500 rose only 0.15%.

Midcaps were weaker. The Nifty Midcap 50 was down 0.07% and the Nifty Midcap 100 declined 0.27%. The Nifty Smallcap 100 was also marginally lower at 0.06%.

This suggests that the benchmark rally is being driven more by selected large-cap stocks than by a broad-based risk-on move across the market.

There was a similar divergence at the sectoral level.

Pharma was among the stronger sectors, with the Nifty Pharma index rising 1.11%. FMCG gained 1.09%, healthcare rose 1.03%, realty advanced 1.28% and consumer durables gained 0.81%.

Private banks were up 0.56% and oil and gas gained 0.41%.

On the other hand, the metal index fell 0.52%, financial services ex-bank declined 0.61% and the mid-small financial index dropped 1.01%.

Nifty IT was almost flat, down 0.07%, after the strong IT-led recovery seen earlier in the week.FOREIGN INVESTOR FLOWS ARE SHOWING SOME RELIEF

Foreign investor activity is another factor investors are watching closely.

FIIs had been persistent sellers in Indian equities during September. According to Reuters, foreign investors had been selling Indian equities for several sessions before turning buyers on Friday, when they bought shares worth around Rs 599.54 crore.

The buying is still relatively small compared with the scale of previous outflows, so it would be premature to treat it as a sustained reversal.

But even a temporary reduction in selling pressure can help domestic markets stabilise after a prolonged fall.

The possibility of foreign money returning becomes particularly relevant if crude continues to cool and global yields stop rising.GLOBAL CUES REMAIN MIXED

The geopolitical backdrop has not disappeared.

Tensions between Iran and the US remain a key source of uncertainty, while developments around the Middle East continue to influence oil prices. At the same time, the US 10-year Treasury yield has been around the 5% mark, keeping pressure on global equity valuations.

That means Monday's gains cannot simply be explained by investors becoming comfortable with geopolitical risks.

Instead, the market appears to be separating the immediate market impact from the longer-term risks.

If crude continues to fall, some of the concerns around inflation, India's trade balance and corporate costs can ease. If crude rises again because of a fresh escalation, the pressure on Indian equities could return.advertisementWHY THE SENSEX IS RISING DESPITE GEOPOLITICAL TENSIONSThe market action can therefore be broken down into four main factors.

First, crude oil prices have fallen sharply from their recent highs, with Brent down more than 2% and back near $101.5 a barrel.

Second, the Sensex and Nifty have already suffered six consecutive weekly declines, creating room for bargain buying and short covering.

Third, heavyweight stocks, particularly HDFC Bank, Kotak Mahindra Bank, Reliance Industries, UltraTech Cement, ITC, Titan and large IT names, are providing support to the benchmark indices.

Fourth, there has been some relief on the foreign-flow front, with FIIs turning buyers on Friday after six sessions of selling.

There is also a domestic earnings argument. Market veteran V K Vijayakumar has said that India's growth outlook remains relatively strong, with GDP growth of around 7% and Nifty earnings growth of 12-14% potentially achievable in FY27. He has also pointed to the possibility of a shift towards large-cap stocks if geopolitical tensions ease and crude prices and bond yields come down.

At the same time, Vijayakumar has noted that mid- and small-cap valuations remain at a premium to large caps, which could influence the market's sectoral and stock-level rotation.

The Rs 22,569-crore NSE IPO is another major domestic market event being watched by investors.

The IPO was scheduled to close on Monday after attracting strong demand. Reuters reported that the issue was fully subscribed as it entered its final day.

The IPO boom has been a major theme in the Indian market because large primary-market issues can absorb liquidity that might otherwise flow into listed shares.

At the same time, strong demand for new issues indicates that domestic investor appetite has not disappeared even during the broader market correction.

This creates an interesting contrast: the secondary market has been under pressure while the primary market continues to attract significant investor interest.

The biggest test for Monday's recovery will be whether the decline in crude oil prices continues.

Brent at around $101-$102 is still high from India's perspective. A sustained move below $100 could provide further relief, while another sharp rise caused by geopolitical escalation could quickly bring inflation and growth concerns back into focus.

Global bond yields are another key variable. The US 10-year yield remaining close to 5% continues to create pressure on global equity valuations and can influence foreign flows into emerging markets.

For Indian equities, the combination of crude, bond yields and FII flows is therefore likely to remain more important than a single day's gain.

Monday's rally shows that investors are willing to buy after a prolonged correction when some of the immediate pressure points ease. But the relatively weak performance of midcaps and smallcaps indicates that the move is not yet a broad-based surge across the market.

For now, the Sensex's nearly 600-point rise is best understood as a combination of falling crude, bargain hunting and buying in large-cap stocks, rather than evidence that geopolitical risks have disappeared.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- EndsPublished By: Sonu VivekPublished On: Sep 21, 2026 14:26 IST