Those 5 reasons due to which the stock market boomed, investors earned Rs 6 lakh crore

The Indian stock market witnessed strong buying across all segments on Monday, May 25, leading to gains of more than 1 per cent in both the benchmark indices – Sensex and Nifty 50. The 30-share index jumped 1,074 points, or 1.42 per cent, to close at 76,488.96, while the Nifty 50 gained 1.32 per cent to close at 24,031.70. BSE 150 Midcap and BSE 250 Smallcap indices gained 0.80 per cent and 1.22 per cent respectively. Investors earned about Rs 6 lakh crore in a single session. Due to which the total market capitalization of companies listed in BSE increased from Rs 463 lakh crore in the previous session to about Rs 469 lakh crore. Let us also tell you what were the 5 reasons due to which there was a tremendous rise in the stock market.

Main reasons for the rise in stock market

1. Hopes for Iran-US peace deal increased:US President Donald Trump has said that Washington and Iran have “substantially negotiated” a peace deal that would effectively reopen the Strait of Hormuz. Later he said that he has told his representatives not to rush into any agreement. Meanwhile, CBS News on Sunday quoted a senior Trump administration official as saying that the US and Iran are slowly moving towards a peace deal, as negotiators have agreed on the broad principles of this much-awaited agreement. These latest developments have increased hopes for an early conclusion of the peace agreement.
2. Oil prices below $100:Oil prices fell sharply due to new expectations of an early conclusion of the Iran-US peace deal. On Monday morning, Brent crude futures were down more than 5 percent to trade at $ 98 per barrel, while WTI crude futures fell by almost 6 percent to $ 91.30 per barrel. This decline has come at a time when investors are expecting the resumption of normal traffic through the Strait of Hormuz. The Strait of Hormuz is a narrow 33 kilometer long waterway that connects the Persian Gulf to the Gulf of Oman, and carries more than 20 percent of the world’s daily oil and gas transport.
3. Boom in foreign markets:Due to new expectations, there was a rise in foreign markets also. On Monday morning, Japan’s Nikkei jumped by almost 3 percent and crossed the level of 65,000 for the first time. China’s Shanghai Composite rose nearly 1 percent, while Taiwan Weighted rose more than 3 percent. European markets closed with gains on Friday, with Germany’s DAX rising more than 1 percent. Last week, Wall Street also closed with a huge gain. ; Dow Jones futures were up nearly 1% on Monday morning, indicating a positive start for the US stock market later today.
4. Strength in Rupee:On Monday, the Indian rupee opened at a two-week high of 95.34 against the US dollar with a gain of 0.37 per cent, while in the previous session it had closed at 95.69. This improvement has come when the Indian currency had fallen to its lowest level ever last week.
5. Fall in bond yields: Bond yields softened and fell below multi-year highs hit last week. The benchmark 10-year US Treasury yield fell to 4.558 per cent, while the yield on 30-year Treasury notes fell to 5.064 per cent. A fall in bond yields generally makes bonds less attractive to investors, which could lead to some volatility in equity markets.

FIIs remain net sellers

Despite the renewed optimism, some caution is necessary. Foreign investors remained net sellers of Indian equities for the fourth consecutive session on Thursday and sold shares worth Rs 4,440 crore on Dalal Street, according to preliminary NSE data. So far this month, foreign investors have mostly adopted a bearish stance on Indian markets. They have been net sellers of Indian equities in 11 out of 15 sessions so far in May.