The BSE Sensex rallied over 500 points in the opening session on Thursday as global markets rebounded after the US offered to embrace peace with the Iranian leadership in a bid to de-escalate tensions in the Middle East.
#CNBCTV18Market | Market opens sharply higher after crude prices slip 5% overnight amid easing #USIranTension; Only 2 Nifty stocks in the red are IT stocks, trading with losses on back of stronger #Rupee
— CNBC-TV18 (@CNBCTV18Live) January 9, 2020
After hitting a peak of 41,318.18, the 30-share BSE index was trading 449.56 points or 1.10 percent higher at 41,267.30. Similarly, the broader NSE Nifty surged 134.05 points or 1.11 percent to 12,159.40. SBI was the top gainer in the Sensex pack, rising up to 2.19 percent, followed by IndusInd Bank, Bharti Airtel, Tata Steel, ICICI Bank, L&T, Axis Bank, Reliance Industries and HDFC twins. On the other hand, TCS was the sole stock trading in the red, according to a PTI report.
In the previous session, Sensex ended 51.73 points, or 0.13 percent, down at 40,817.74, while Nifty shed 27.60 points, or 0.23 percent, to finish at 12,025.35.
Meanwhile, on a net basis, foreign institutional investors sold equities worth Rs 515.85 crore, while domestic institutional investors purchased shares worth Rs 748.40 crore on Wednesday, data available with stock exchanges showed.
According to traders, domestic investors turned positive as global equities rebounded after US President Donald Trump offered to embrace peace with Iran.
Claiming that no Americans were harmed in the attack by Iran on US bases in Iraq, Trump called on Iran to "work together" to eliminate the Islamic State.
In a direct message to the Iranian leaders and the people, Trump said the United States was "ready to embrace peace with all who seek it".
Bourses in Shanghai, Hong Kong, Tokyo and Seoul rallied up to 2 percent.
Rupee strengthens 22 paise as US, Iran seek to diffuse crisis
The Indian rupee advanced 22 paise to 71.48 per US dollar in opening trade on Thursday as global markets stabilised after the US and Iran toned down their war rhetoric.
At the interbank foreign exchange market, the rupee opened strong at 71.44 against the greenback, according to a PTI report.
The domestic unit had settled at 71.70 per dollar on Wednesday.
US President Donald Trump on Wednesday said Washington did not necessarily have to respond to Iranian attacks at American military bases in Iraq.
The comments came after Iran fired rockets at US facilities in Iraq in response to the killing of its top general Qassem Soleimani.
Reports said there were no US or Iraqi casualties from the Iranian strikes, amid speculation that Tehran may have deliberately pulled its punches to avoid a wider conflagration.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 percent lower at 97.27.
Asian shares erase losses
Asian stocks rebounded on Thursday and oil edged up as the United States and Iran backed away from the brink of further conflict in the Middle East and investors unwound safety plays, according to a Reuters report.
US President Donald Trump responded overnight to an Iranian attack on US forces with sanctions, not violence. Iran offered no immediate signal it would retaliate further over a 3 January US strike that killed one of its senior military commanders.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 1 percent, as did Hong Kong's Hang Seng and Shanghai blue chips, reversing Wednesday's losses.
Japan's Nikkei rose 1.8 percent, lifting stocks to their highest for the year so far, while Australian stocks climbed 1 percent to just below December's record high.
“I think today is a bit of a relief rally,” said Shane Oliver, Chief Economist at AMP Capital in Sydney.
“Yesterday, investors were fearing the worst, that this was the escalation now underway. The news overnight has been more along the lines that Iran pulled its punches and Trump is toning things down,” he said, “which is seen by investors as substantially reducing the risk of war.”
Investors quit the safe-haven Japanese yen sending it sliding from a three-month high to a two-week low of 109.25 yen per dollar.
Oil now sits just about where it was before the killing of the Iranian commander, Qassem Soleimani, in Baghdad, a strike that raised fears of an escalating regional conflict.
Brent futures LCOc1 prices crept up from month lows hit overnight to $65.84 per barrel, about where they began the year.
Gold gave back sharp gains made on Wednesday but remains dearer than before Soleimani’s death, in an indication that investors’ fears have not completely evaporated.
It drifted higher to $1,560.00 per ounce.
Sanctions, not strikes
Iran fired missiles at military bases housing US troops in Iraq on Wednesday in response Soleimani’s killing. But Trump said no Americans were hurt and made no direct threats of a military response in an address to the nation on Wednesday.
“Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world,” he said. He announced economic sanctions on Iran without giving details.
Iranian Foreign Minister Mohammad Javad Zarif had earlier said the strikes “concluded” Tehran’s response to the killing of Soleimani.
On Wall Street stocks rose, led by the Nasdaq which added 0.67 percent, while the Dow Jones Industrial Average and the S&P 500 each rose roughly half a percentage point.
US Treasuries, which had soared in the flight to safety a day ago also settled back, with yields on the benchmark 10-year US Treasury note US10YT=RR at 1.8598 percent, after dropping as low as 1.705 percent.
Risk appetite was also evident in currency markets, with China's trade-exposed yuan standing at a five-month high of 6.9283 per dollar and the Aussie creeping higher.
“All is well—so says Trump! That is the mood today,” said Bank of Singapore Currency Strategist Moh Siong Sim, a reference to Wednesday’s upbeat tweet from the president.
“I think that neither side wants to have a further escalation in tension, and both parties seem to be standing down.”
--With inputs from agencies
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Updated Date: Jan 09, 2020 10:26:57 IST