Sensex, Nifty trade higher after Trump signals possible Iran deal

Markets open firm, IT and telecom stocks lead gains. Representational Image

Domestic equity markets traded higher on Tuesday in early trade amid hopes of a de-escalation in the West Asia conflict after US President Donald Trump indicated a possible nuclear deal with Iran.

Sensex rose as much as 368 points or 0.48 per cent to hit an intraday high of 75,683 in morning trade, while Nifty was trading at 23,758, up 110 points or 0.45 per cent.

Sectorally, IT stocks led the gains, with the Nifty IT index surging 4 per cent. Similarly, the Nifty MidSmall IT Telecom index advanced nearly 3 per cent, while the Nifty Chemicals index rose 1.16 per cent.

Among laggards, the Nifty Private Bank index slipped by 0.11 per cent. Nifty Auto and Nifty Metal indices were also trading marginally lower.

From the Nifty pack, Hindalco Industries declined the most, falling over 1 per cent, followed by Coal India which slipped 0.93 per cent and ONGC which traded 0.81 per cent lower. Titan Company was down around 0.6 per cent, while Kotak Mahindra Bank and Eternal fell 0.54 per cent and 0.49 per cent, respectively.

JSW Steel, UltraTech Cement and Shriram Finance were also trading lower by up to 0.47 per cent. Heavyweights HDFC Bank and ICICI Bank slipped marginally.

Analysts said concerns over elevated valuations in global AI-linked stocks were prompting investors to look at relatively attractive segments in India.

"If FII buying gathers momentum, large-cap financials, especially leading banks, are likely to outperform given their reasonable valuations and growth potential," market experts said.

On the broader macroeconomic outlook, analysts said concerns related to growth, inflation and currency depreciation continue to persist amid the ongoing energy crisis.

They advised investors to focus on sectors that are relatively insulated from these headwinds, including pharmaceuticals, power-related companies and defence stocks.

Commenting on earnings, analysts said fourth quarter results were encouraging and, in many cases, better than expected, signalling that the economy had started recovering due to last year's fiscal and monetary stimulus measures before being hit by the latest energy shock.

"A quick resolution of the Strait of Hormuz crisis could help the economy recover faster and limit the extent of the slowdown expected this year," they added.

Markets found support after American President Trump said he had paused a planned attack on Iran following a peace proposal from Tehran and that there was a very good chance of reaching a deal on Iran's nuclear programme.

In commodities, oil prices traded lower, with international benchmark Brent crude declining 2.74 per cent to USD 109.02 per barrel, while US WTI crude traded 2.16 per cent lower at USD 102.12 per barrel.

In Asia, markets traded mixedly. Japan's Nikkei and South Korea's KOSPI slipped up to 3 per cent, while Hong Kong's Hang Seng traded marginally higher.

Overnight in the US, the S&P 500 ended nearly flat, down 0.07 per cent, while the Nasdaq declined 0.51 per cent.

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