Diwali Comes Early for Investors as Sensex and Nifty Stage Massive Rally

Will the uncertainty that has gripped the domestic stock market since the outbreak of the war against Iran finally come to an end soon? Will things now return to normal after US President Donald Trump's Republican Party suffered a major setback in the US midterm elections? These are the questions currently on the minds of investors. The US midterm election results have also boosted sentiment in American markets. Meanwhile, the same enthusiasm has spilled over into Indian stock markets, bringing Diwali celebrations early. The BSE Sensex ended Thursday's trading session with a massive gain of 2,008 points, reflecting the extent to which the US election results have influenced global markets.

Following the setback to Donald Trump, the chances of him adopting the same aggressive approach as before on several key issues, including the war against Iran, are expected to decline significantly. As a result, crude oil prices plunged to a two-month low of $93 per barrel. Meanwhile, the Indian rupee also strengthened against the US dollar. With several factors working in their favour, both the BSE and NSE indices surged sharply. The Nifty crossed the 24,500-point mark. In a single trading session, the market capitalisation of companies listed on the BSE increased by a staggering Rs. 8 lakh crore.

Developments in international markets, particularly the decline of more than 8 per cent in crude oil prices, proved favourable for domestic stock markets. The fall in global crude oil prices strengthened investor sentiment. Expectations that lower oil prices would reduce India's import bill and ease inflationary pressures also boosted market confidence. Going forward, the direction of the stock market will largely depend on the steps US President Donald Trump takes in the coming days.