Sensex gains 1000 points, Nifty 50 above 25,500; why did the Indian stock market skyrocketed today? EXPLAINED

Stock market today: The Indian stock market rallied for the third straight session on Thursday, June 26, with the Nifty 50 jumping 304 points, or 1.21%, to end at a 9-month high of 25,549. The Sensex surged 1,003 points, or 1.21%, to close at 83,759, a level not seen since October 2024. Both indices are now trading just 2.3% below their September peaks.

The broader markets have also maintained their winning run, with Nifty Midcap 100 and Nifty Small cap 100 index ending with over 0.5% gain each.

In terms of sectoral performance, metal stocks led the market rally, with all constituents of the Nifty Metal index ending in the green, pushing the index up by 2.3%. This was followed by oil and gas stocks, as a sharp fall in crude prices boosted shares of oil marketing companies, resulting in the Nifty Oil & Gas index rising 1.86%.

Among individual counters, Brainbees Solutions surged 17%, while Apar Industries, Raymond Lifestyle, Nuvama Wealth Management, and 71 other constituents of the Nifty 500 gained between 2% and 5%.

What powered the surge in Indian stock market today?

Tensions ease in the Middle East

Israel and Iran seemed to honor the fragile ceasefire between them for a second day Wednesday and U.S. President Donald Trump asserted that American and Iranian officials will talk next week, giving rise to cautious hope for longer-term peace.

The 12-day-long conflict between Iran and Israel paused on Tuesday after President Trump announced a ceasefire. The announcement came after days of escalating tensions that had rattled global markets amid fears of a wider regional spillover.

The conflict between Iran and Israel began on June 13 when Israel launched a massive airstrike on Iranian military and nuclear sites, codenamed "Operation Rising Lion". In retaliation, Iran's Islamic Revolutionary Guard Corps (IRGC) initiated a large-scale drone and missile campaign called 'Operation True Promise 3', targeting Israeli fighter jet fuel production facilities and energy supply centers.

Dollar index hits 3-year low amid Trump’s attack on Fed

The US Dollar Index, which measures the greenback against six major currencies, fell to a three-year low of 97 after President Donald Trump launched a fresh attack on Federal Reserve Chair Jerome Powell. The move revived concerns over the central bank’s independence.

Trump has been pressuring the Fed to cut interest rates in an effort to reduce the federal government’s borrowing costs. He sharply criticized Powell, calling him a “numbskull” and a “fool,” fueling speculation that he may attempt to replace the Fed Chair in a bid to exert more influence over monetary policy.

According to a report by The Wall Street Journal, President Trump is considering naming a successor to Powell as early as September or October — a move seen as installing a “shadow” chair to guide policy in a more dovish direction.

US rate cut bets rise despite Powell’s caution

Meanwhile, Fed Chair Jerome Powell, during the second day of his testimony, maintained a cautious tone. He stated that the Fed can manage inflation driven by tariffs but is not yet prepared to cut rates, despite mounting political pressure.

However, weaker-than-expected consumer confidence in June has raised fresh concerns over the labor market and ongoing trade tensions, challenging the Fed’s current stance. Investor focus is now turning to key upcoming economic indicators, including Thursday’s final Q1 GDP reading and initial jobless claims, followed by Friday’s PCE inflation data, all of which may influence the Fed’s next move.

Strong domestic support

Overseas investors remained net sellers over the last three sessions, but strong inflows from domestic institutional investors (DIIs) have helped frontline indices stay afloat. So far in the current month, foreign portfolio investors (FPIs) have sold Indian equities worth ₹5,670 crore. In comparison, DIIs have bought nearly ₹70,000 crore during the same period, following net purchases of ₹66,194 crore in May.

Mutual funds alone contributed over ₹36,000 crore in June, compared to ₹53,260 crore in the previous month.

Tariff relief talks gain momentum

India is expected to push for an extension of the exemption window from Trump’s reciprocal tariffs, scheduled to take effect from July 9. New Delhi and Washington are still negotiating a mini trade deal, part of a scaled-down Bilateral Trade Agreement (BTA), likely to be finalized by September, according to media reports.

(With inputs from agencies) 

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