Why did Sensex, Nifty surge nearly 1% despite Israel-Iran conflict? Here's what experts say

Sensex, Nifty surged on Monday amid positive cues. 

The benchmark indices Sensex and Nifty rose nearly 1 percent on Monday, driven by gains in IT and oil stocks, value buying and a rebound in global equities amid easing crude oil prices despite tensions in West Asia.

The Sensex jumped 677.55 points or 0.84 percent to close at 81,796.15. During the day, it surged 747.22 points to 81,865.82. The broader Nifty climbed 227.90 points or 0.92 percent to settle at 24,946.50.

"Global markets often behave contrary to expectations. The escalation between Israel and Iran initially led to a spike in crude oil and safe-haven buying. However, the lack of direct supply disruptions, especially through the Strait of Hormuz, helped stabilise crude prices," said Harshal Dasani, Business Head, INVasset PMS.

He added that inflation fears have eased and investors are refocusing on domestic economic fundamentals. "Geopolitical risks tend to get priced in early. With worst-case scenarios now ruled out, markets are bouncing back. Investors are rotating capital into domestic sectors like energy, power, defence, and capital expenditure that remain structurally strong and less exposed to external shocks."

Dasani also pointed out that corporate earnings have held up, recession concerns have receded, and global central banks, including the US Federal Reserve, are maintaining a stable rate stance. This has reinforced a buy-on-dips approach among investors.

Ajay Bagga, a veteran money manager, said, "Within this week, the market may start discounting the conflict. When Gaza ceasefires happened previously, global markets had rallied. A similar recovery could follow once there is some clarity."

Equities show measured reaction to Israel-Iran war as money managers price in a limited conflict

Chirag Mehta of Quantum AMC told Moneycontrol that the key risk remains whether the Israel-Iran conflict escalates into a wider regional war. "If the conflict stays restricted, the market tends to move on and focus back on fundamentals. We’ve seen this pattern over the last few years," he said.

Global cues remained supportive as the major Asian indices including South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite, and Hong Kong’s Hang Seng ended higher. European markets were also trading in the green, while US stock futures were up around 4:30 PM IST.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.