Sensex surges 859 points as IT stocks lead broad-based rally

Key Takeaways:

Sensex climbed 859 points to 77,624, Nifty rose 256 points to 24,241
Nifty IT led sectoral gains at 2.4%, with Infosys up 3.8% and L&T up 2.4%
Oil prices jumped over 4% after US-Saudi strikes on Iran-backed targets

Indian equities surged Wednesday, with the Sensex climbing 859 points to 77,624, as IT stocks rallied and foreign buying resumed before the Federal Reserve's rate decision.

"The market is drawing support from strong domestic macro data and renewed FII inflows, though the Fed decision and elevated oil prices remain key risks," said Rajesh Palviya, head of research at Axis Direct.

Nifty IT gained 2.4%, the most among sectoral indices, followed by Nifty Metal at 1.9%. Infosys rose 3.8%, L&T added 2.4%, and HDFC Bank contributed 27 points to the Nifty's advance. The advance-decline ratio stood at 41:9, reflecting broad-based participation. Nifty futures traded above the 24,200 support level, with resistance at 24,370 and 24,450, according to technical indicators.

The rally comes as investors weigh June industrial production growth of 7.3% against a 4% jump in crude oil prices after US-Saudi strikes on Iran-backed targets, with the Federal Reserve's policy decision due later Wednesday set to test the sustainability of the risk-on move.

Sector Rotation Favors IT, Metals as Oil Spike Caps Gains

The Nifty's 1.1% advance masked divergent sector performance. Nifty IT surged 2.4% on renewed demand optimism for Indian outsourcing firms, while Nifty Metal added 1.9% on expectations of higher steel prices. Nifty Auto gained 1%, supported by softer crude prices earlier in the session before the geopolitical escalation.

On the losing side, Nifty Oil & Gas slipped 0.1% as rising crude prices weighed on refining margins. Power Grid fell 0.7%, and InterGlobe Aviation declined 0.6% on concerns that higher jet fuel costs could pressure margins.

Options positioning showed the 24,200 strike holding the highest put open interest at roughly 12.2 lakh contracts, making it the strongest support in the current weekly series. Call writers concentrated at the 25,000 strike, which carried the highest call open interest at about eight lakh contracts.

Oil Spike, Fed Decision Test Rally's Staying Power

Brent crude rose 4% to $87.50 a barrel after the US and Saudi Arabia conducted joint strikes on Iran-backed targets in Iraq, reversing a three-day rout that had taken prices below $84. WTI crude climbed 4.3% to $82.63. The rupee strengthened 12 paise to 95.70 against the dollar, supported by RBI-backed intervention and renewed foreign inflows.

The Federal Reserve's policy decision at 2 PM ET is the immediate catalyst. Markets assign a 33% probability of a 25-basis-point increase, though most analysts expect rates to remain at 3.50% to 3.75%. A hawkish hold could strengthen the dollar and compress emerging-market flows, while a dovish outcome would validate the risk-on rotation into Indian equities.

"Traders should avoid chasing the gap-up and instead wait for confirmation above resistance before initiating fresh long positions," said Gaurav Udani, founder of Thincredblu Securities. "The short-term trend remains constructive as long as Nifty holds above the 23,900 to 24,000 support zone."

This article is for informational purposes only and does not constitute investment advice.