The benchmark equity indices Sensex and Nifty rallied on Thursday, supported by easing crude oil prices following positive geopolitical developments and strong buying in information technology shares.

The Sensex climbed over 500 points during the session, while the Nifty traded above the 24,150 mark.

All major Nifty sectoral indices traded in the green, except FMCG. The broader Nifty Smallcap 100 and Nifty Midcap 100 indices advanced 0.74 percent and 0.51 percent, respectively.

Among benchmark heavyweights, HDFC Bank and ICICI Bank gained 0.7 percent and 0.8 percent, respectively, lending support to the benchmark indices.

Shares of some mid-sized banks also advanced after reporting healthy growth in advances for the June quarter. Dhanlaxmi Bank jumped 6.3 percent, while Tamilnad Mercantile Bank rose 3.5 percent.

Key factors behind market rise

1) Decline in crude oil prices: Brent crude, the global oil benchmark, traded 1 percent lower at USD 70.79 per barrel. Oil prices declined for the third straight session and touched their lowest level in four months amid easing geopolitical concerns.

As the Strait of Hormuz remains open and crude supplies continue to flow, expectations of oversupply and competition for market share have increased, putting pressure on prices, Haitong Futures said in a note. OPEC+ oil-producing countries are also expected to agree to another increase in output targets from August when they meet on Sunday, according to Reuters.

"There are some positive trends that are providing near-term support and strength to the market. One, crude continues to fall with Brent below USD 71 now. This will further strengthen India's macros and help in achieving higher growth while keeping inflation in check.

"Two, the auto sales numbers in June was strong. This indicates that the demand momentum in the economy continues to be strong," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

2) Easing geopolitical concerns: Qatar said Iran and the US made progress in indirect talks focused on the Strait of Hormuz, through which about one-fifth of global oil supplies passed before the conflict.

The discussions resulted in "positive progress" on issues related to the memorandum that halted the war in June, a spokesperson for Qatar's Foreign Ministry said in a post on X. The next round of talks between Iranian and US negotiators is scheduled for July 9.

"Qatar has stated that the latest round of indirect US–Iran talks has made 'positive progress', keeping hopes of a broader diplomatic resolution alive," Ponmudi R, CEO of Enrich Money, an online trading and wealth-tech firm, said.

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3) Firm cues in Asian markets: In Asian markets, South Korea's Kospi traded over 4 percent lower, while Hong Kong's Hang Seng index quoted more than 1 per cent higher.

"The AI trade in South Korea is weakening as indicated by the 11.5 percent correction in Kospi last month. This is positive for non-AI markets like India," Vijayakumar said.

4) Rupee rises: The rupee appreciated 26 paise to 84.90 against the US dollar, supported by lower crude oil prices. Forex traders said the domestic currency opened on a positive note as crude oil prices retreated to levels seen before the West Asia conflict. They added that global risk sentiment has also stabilised compared with the volatility witnessed a few weeks ago.

Foreign investors infused nearly USD 5.3 billion into the Indian bond market during June, the first month of net inflows after three consecutive months of outflows, they said.

"... As fresh foreign capital starts entering India, markets believe the RBI may continue absorbing a significant portion of these inflows rather than allowing them to fully strengthen the rupee," CR Forex Advisors MD Amit Pabari told PTI.

5) Decline in India VIX: India VIX, the market's volatility gauge, declined more than 3 percent to 12.82. A lower India VIX indicates easing investor anxiety and expectations of lower market volatility in the near term. It generally improves risk appetite and supports buying in equities.

6) Buying in IT shares: IT stocks rebounded sharply, with the Nifty IT index surging more than 3 percent after four consecutive sessions of losses as investors returned to beaten-down sector heavyweights despite mixed global technology cues. The recovery was led by frontline IT companies, which featured among the top Nifty gainers. Infosys advanced 3.9 percent, HCLTech climbed 3.4 percent and Tata Consultancy Services gained 2.6 percent.

7) Weekly Sensex expiry: Thursday is the weekly expiry day for Sensex derivatives contracts. Such sessions typically witness higher trading activity and increased volatility as traders square off or roll over their positions, often resulting in sharp intraday swings in the benchmark indices.

Technical Outlook

Anand James, Chief Market Strategist at Geojit Investments, said, "On anticipated lines, yesterday's upswings could not stretch beyond the 24000 vicinity, but a higher VWAP encourages us to be prepared for an extended upside. While 24170 region is expected to offer a challenge initially, prospects of 24600 appear higher, as long as dips are contained above 23970."

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