Sensex fell more than 500 points in early trade, then recovered to close almost 500 points higher, ending a four-day losing streak. Lower oil prices and talk of Gulf diplomacy brought buyers back, especially for the smaller stocks that had been hit hardest.
The Sensex rose 482.92 points on Monday to close at about 73,607, and the Nifty 50 ended at 22,753, up about 0.7%. That ended a four-session losing streak that had taken the Nifty down 2.4% last week.
The recovery came after a weak start. Shortly after the open, the Sensex was down 535 points at 72,588.55, and the Nifty fell to about 22,420, only about 1% above its 52-week low of 22,179.90. From that low to the close, the Sensex recovered roughly 1,000 points.
Smaller stocks led the recovery. The Nifty Midcap 100 rose 1.19% and the Nifty Smallcap 100 gained 1.38%. On Friday they had fallen 2.2% and 2.9%, and the BSE Smallcap index is still down almost 9% for October. The Nifty Metal index rose 2.2%, the best-performing sector.
Why the market recovered
Oil was the main reason. Brent crude eased from the six-month highs reached last week after Reuters reported that Qatari mediators were in Tehran on Sunday, in coordination with Washington, to try to ease regional tensions. President Trump said on Sunday he was weighing a deal with Iran against further military action and ruled out a strike that day.
Even a small easing in oil helps Indian shares, because oil drives so many of India’s economic pressures, including inflation, the rupee, interest rates and corporate costs. After a week in which Brent rose more than 6%, any sign of diplomacy gave investors a reason to buy back stocks that had fallen sharply.
Some of the buying was also bargain-hunting after a steep fall. Smaller stocks, which have fallen most this month, attracted buyers who saw valuations as more reasonable after the decline.
Too early to call a turning point
One strong day does not change the trend. The Nifty is still close to its 52-week low, foreign investors have taken ₹48,000 crore out of Indian shares this month, and the factors behind the decline are still in place.
The Middle East remains very uncertain. Neither Washington nor Tehran has publicly moved from the positions that stalled earlier talks, the Houthis continue to attack Saudi oil infrastructure, and the US midterm elections on 3 November could bring renewed military action. A breakdown in mediation would quickly push oil higher again.
A busy few days ahead
The next three days will test whether the recovery can last. Larsen & Toubro, Maruti Suzuki, Bajaj Auto, Tata Steel and Cipla report results on Tuesday. On Wednesday, Jio Platforms lists after its record IPO, on the same day the US Federal Reserve announces its decision. Goldman Sachs expects the Fed to hold this week but raise rates in December. The Bank of Japan meets on Thursday.
For now, Monday’s rally shows that investors will return quickly when oil eases. Whether they stay depends on whether the diplomacy produces results.
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