Indian Stock Market Surges Over 1,000 Points in Two Days Driven by Cooling Oil Prices

The Indian stock market extended sharp gains for the second consecutive session on Wednesday, with Sensex recovering more than 1,000 points and Nifty crossing 23,400 as markets stood resilient despite fresh escalations in the Iran-US war.Over these two sessions, Sensex jumped 1,010 points to hit an intraday high of 74,535 on Wednesday. Nifty meanwhile gained around 287 points to rise to 23,410 today in the afternoon. The gains over the two sessions added more than Rs 5 lakh crore to the total market capitalisation of all companies listed on BSE, pulling it up to over Rs 460 lakh crore. While the benchmark indices recorded sharp gains, broader markets slipped into the red today after a strong surge in the last session. Nifty Midcap 100 and Nifty Smallcap 100 indices declined up to 0.4% in the afternoon, even as India VIX, which measures volatility in markets, fell around 0.7% to 15.47.Hindustan Unilever (HUL), ICICI Bank, Axis Bank and Kotak Mahindra Bank shares jumped over 2% to lead gains on the Sensex today. ITC, L&T, Asian Paints, Power Grid, SBI and Adani Ports shares rose around 1% each to follow. Bucking the trend, Tata Steel shares fell nearly 1% to lead losses.Sectorally, Nifty FMCG and Nifty Private Bank jumped more than 1% each to lead gains, while Nifty Metal dropped around 0.7%. Around 1,386 stocks advanced on the NSE, while 1,741 declined and 99 remained unchanged.Here are the key factors pushing markets higher in these two sessions, snapping a previous two-day losing streak.1) Oil prices cool downTensions between Iran and the US re-escalated overnight, further erasing expectations of the two countries concluding their much-awaited peace deal and ending the ongoing conflict in the Middle East. The US military launched airstrikes and Iran retaliated after the crash of an Army helicopter near the Strait of Hormuz, which US President Donald Trump blamed on the Islamic Republic. Iran launched attacks in Bahrain and Kuwait, which both sounded alerts and fired air defences in response. Iran said it has targeted an air base in Jordan hosting US forces.However, oil prices cooled down despite the rising escalations. Brent crude futures fell below $92 per barrel, and WTI Crude declined to $88 per barrel. This came after oil prices had soared to multi-year highs above $100 per barrel for several weeks following the closure of the Strait of Hormuz, a narrow 33-kilometre waterway connecting the Persian Gulf with the Gulf of Oman that handles over 20% of the world’s daily oil and gas shipments. The market is likely to largely ignore the escalation of the conflict in West Asia as a one-off. The softness in crude price indicates that. Despite the escalation, Brent crude continues to trade below $93 level,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.2) AI rally in global markets fizzles outIndian stock market has relatively remained muted in 2026 so far when compared to the massive surges seen in peers like South Korea or others. This came amid a skyrocketing rally in AI-led tech stocks, including TSMC and Samsung, leading to India briefly losing out on its rank as the world’s sixth-largest stock market to South Korea. According to market veteran Punita Kumar Sinha from Pacific Paradigm Advisors, the country's lack of exposure to semiconductor manufacturing has limited its participation in the AI-driven rally that has captivated investors across the United States and North Asia.However, the AI trade soon fizzled out as geopolitical uncertainties and inflation worries weighed. South Korea’s Kospi today tumbled around 5% while Japan’s Nikkei declined 2%. Taiwan Weighted meanwhile plunged more than 3%, while the Indian market gained.“A significant trend in global markets is the fatigue that is creeping into AI trade. FIIs appear to be increasingly cautious about the concentration risks associated with the AI-related trade in South Korea and Taiwan. But this has not yet been reflected in the FIIs looking at Indian stocks, where they continue to sell. Even though the Indian market has corrected, the fact remains that the valuations are not yet attractive,” Vijayakumar said.2) AI rally in global markets fizzles outIndian stock market has relatively remained muted in 2026 so far when compared to the massive surges seen in peers like South Korea or others. This came amid a skyrocketing rally in AI-led tech stocks, including TSMC and Samsung, leading to India briefly losing out on its rank as the world’s sixth-largest stock market to South Korea. According to market veteran Punita Kumar Sinha from Pacific Paradigm Advisors, the country's lack of exposure to semiconductor manufacturing has limited its participation in the AI-driven rally that has captivated investors across the United States and North Asia.However, the AI trade soon fizzled out as geopolitical uncertainties and inflation worries weighed. South Korea’s Kospi today tumbled around 5% while Japan’s Nikkei declined 2%. Taiwan Weighted meanwhile plunged more than 3%, while the Indian market gained.“A significant trend in global markets is the fatigue that is creeping into AI trade. FIIs appear to be increasingly cautious about the concentration risks associated with the AI-related trade in South Korea and Taiwan. But this has not yet been reflected in the FIIs looking at Indian stocks, where they continue to sell. Even though the Indian market has corrected, the fact remains that the valuations are not yet attractive,” Vijayakumar said.MORE TO COME................