Sensex, Nifty Extend Recovery for Second Day as Reliance, Oil-Linked Stocks Rally

Market Gains Momentum as Crude Price Drop Boosts Key Sectors

India’s equity markets extended their recovery streak for the second consecutive session on March 6, with the Sensex and Nifty 50 closing in positive territory. The upward momentum was driven by strong gains in Reliance Industries Ltd. (RIL) and crude-sensitive stocks such as Asian Paints and BPCL, as global crude oil prices tumbled following the latest OPEC+ decision on production cuts.

Despite a cautious start, the markets saw high intraday volatility, oscillating between gains and losses in the early hours of trading. However, buying from oversold levels helped the Nifty and Sensex reverse course by midday, pushing indices into the green by the close of the session.

Crude Oil Price Drop Sparks Market Rally

Global crude oil prices witnessed a sharp decline after OPEC+ announced plans to gradually unwind voluntary production cuts. The oil-producing group intends to restore 2.2 million barrels per day (mbpd) of supply over the next two years, reversing 38 percent of the 5.9 mbpd cuts imposed since 2022.

In response:

• Brent crude prices slumped 6.5 percent over the past four sessions, hitting their lowest level since December 2021.
• West Texas Intermediate (WTI) crude dropped 5.8 percent, marking its weakest level since May 2023.

The fall in crude prices came as a positive development for several oil-dependent sectors, where lower input costs translate into higher profit margins. Stocks in sectors such as paint, aviation, and refining saw strong buying interest, with Asian Paints and BPCL surging between 3-5 percent, emerging as the top gainers in the Nifty 50 index.

Broader Market Performance: Metal and Energy Stocks Lead the Surge

By 3 PM IST, the benchmark indices recorded strong gains:

• The Sensex climbed 627.51 points (0.85%) to 74,357.74.
• The Nifty 50 advanced 211.30 points (0.95%) to 22,548.60.
• Market breadth remained firmly positive, with 2,811 stocks advancing, 782 declining, and 82 remaining unchanged.

Sectoral Performance: Nifty Metal, Energy, and Oil & Gas Shine

The Nifty sectoral indices reflected broad-based buying, with several key sectors posting strong gains:

• Nifty Metal Index surged nearly 3 percent, boosted by falling dollar index and optimism over China’s stimulus package.
• Nifty Energy and Nifty Oil & Gas climbed over 2 percent each, benefiting from falling crude oil prices.
• Nifty FMCG, Nifty Media, and Nifty Pharma gained between 1-2 percent, adding further strength to the market’s recovery.

Banking Stocks Recover from Early Losses

After an initial dip, banking stocks managed to recover, helping the Nifty Bank index close 0.3 percent higher. The broader financial sector, which had seen profit booking earlier in the week, witnessed renewed buying interest as investor sentiment turned positive.

Reliance Industries and Crude-Sensitive Stocks Fuel the Rally

One of the key drivers of today’s market rally was Reliance Industries Ltd. (RIL), which saw strong buying interest due to its diversified energy portfolio and potential gains from lower crude prices.

Additionally, companies with direct crude exposure, including BPCL, Asian Paints, and select aviation stocks, recorded sharp gains, as their profit margins improve when crude oil prices fall.

Market Outlook: Will the Rally Sustain?

The market’s two-day recovery has provided some relief to investors following recent volatility. However, analysts caution that global uncertainties, including U.S. Federal Reserve rate policies, geopolitical risks, and foreign institutional investor (FII) outflows, could keep markets on edge in the near term.

Highlights to Watch in the Coming Days

• Crude Oil Movement: If oil prices continue to slide, it could further support earnings growth for sectors such as paint, aviation, and refining.
• Global Market Cues: Investors will track Federal Reserve commentary, U.S. inflation data, and China’s economic policies for further direction.
• FII Activity: Sustained foreign inflows or outflows will play a critical role in determining market momentum.
• Domestic Macroeconomic Data: Investors will closely watch India’s GDP growth figures, inflation trends, and credit growth data for clues on economic strength.

Positive Momentum, But Volatility Persists

While the Sensex and Nifty 50 have managed to extend their recovery, market experts warn that volatility could persist amid global economic uncertainties. However, the drop in crude prices, strong buying in metal and energy stocks, and continued resilience in key index heavyweights like Reliance Industries have bolstered investor sentiment in the short term.

As the market moves forward, investors will need to stay cautious, keeping an eye on global and domestic macroeconomic factors while capitalizing on emerging opportunities in select sectors.