Markets surge on news of Iran-Israel ceasefire but lose steam to close marginally up

As stock markets opened for trading on Tuesday, investors were greeted with good news. US President Donald Trump had announced a truce between Israel and Iran, and oil prices were slipping... Bulls let themselves lose on the Dalal Street. But, as the session wound down and the ceasefire seemed to be collapsing, the morning's enthusiasm had given way to nervousness yet again.

 

The BSE Sensex surged over 1,100 points to hit an intra-day high of 83,018.16. But, it eventually ended the session at 82,055.11, up 158 points or 0.2 per cent. Similarly, the NSE Nifty50 index touched an intra-day high of 25,317.70 before closing at 25,044.35, up 72 points or 0.3 per cent.

 

What's behind this massive mood swing on Tuesday? In the morning, as a ceasefire was announced between Israel and Iran, investors heaved a sigh of relief, hoping the 12-day conflict that had led to high volatility in the crude oil market was finally ending. Oil prices hit a two-week low.

 

But, just a few hours later, as Israel accused Iran of violating the ceasefire and ordered fresh strikes, the euphoria had ebbed.

 

"Initial gains in the domestic market, driven by the ceasefire announcement and sharp drop in crude prices, were short-lived as renewed geopolitical tensions in the Middle East unsettled investor sentiments," said Vinod Nair, head of research at Geojit Investments.

 

Midcaps and smallcap, too, gave up some of their intra-day gains. The BSE Midcap index still closed 0.5 per cent higher, while the smallcap index rose 0.7 per cent.

 

"Although the market attempted to break out of its recent consolidation range, persistent global risks continue to impede momentum," said Nair.

 

Banks and financial services companies were among the major gainers on Tuesday. Kotak Mahindra Bank, Bajaj Finserv, State Bank of India, HDFC Bank and Axis Bank gained 0.5 per cent to 1.5 per cent higher. Tata Steel, Titan, Tata Motors, Larsen and Toubro, Mahindra and Mahindra, Ultratech Cement and Asian Paints were among the other Sensex gainers.

 

On the other hand, software exporters like HCL Technologies, Infosys, Tech Mahindra and TCS were under selling pressure. Power Grid, NTPC, Trent, Maruti Suzuki, Reliance and Hindustan Unilever were also among the losers.

 

Concerns resurfaced in the latter half following reports of a possible ceasefire violation by Iran, which led to a pullback and erased most of the early gains, said Ajit Mishra, senior vice-president, research at Religare Broking.

 

"The Nifty's failure to surpass the 25,200-resistance level indicates that the bears are still active and not ready to give in. However, rotational buying across key sectors, along with notable strength in the midcap and smallcap segments, continues to offer trading opportunities," Mishra added.

 

In the global markets, Asian markets had closed sharply higher; Japan's Nikkei 225 index surged 1.1 per cent, and the Hang Seng in Hong Kong jumped over 2 per cent. European markets were also trading largely in the green, with the Deutsche Börse DAX index in Germany up 1.8 per cent and the FTSE 100 in London rising 0.3 per cent.

Business