Markets rally on Diplomatic Progress and Nvidia Beat

Mr. Devarsh Vakil, Head of Prime Research at HDFC Securities

Major U.S. stock indexes surged on Wednesday, snapping a three-day losing streak as the Dow Jones reclaimed the 50,000 mark. This rebound was driven by a cooling in 10-year Treasury yields and a sharp decline in oil prices following reports of progress in diplomatic negotiations regarding Middle East conflicts.

AI industry leader Nvidia reported first-quarter results that surpassed analyst expectations for both revenue and profit. Despite raising its dividend and providing a positive sales forecast. The company also announced an $80 billion share buyback, though shares slipped slightly in after-hours trading as investors weighed the results against extremely high market expectations.

Crude Oil plunged more than 5% yesterday on optimism over a potential US-Iran agreement. President Trump stated the US is in the "final stages" of negotiations with Iran, stoking hopes for a near-term reopening of energy flows through the Strait of Hormuz, though the US military also boarded an Iranian oil tanker suspected of breaching the blockade.

Federal Reserve minutes revealed that an increasing number of policymakers are open to a rate hike, as inflation concerns have been exacerbated by the ongoing conflict in Iran.

The 10-year US Treasury yield has surged to a 15-month high above 4.10%, and a survey shows fewer than 50% of economists now expect a rate cut this year, down from two-thirds just a month ago.

European Union negotiators reached a preliminary agreement on Wednesday to eliminate certain tariffs on US imports as part of a broader trade arrangement, ahead of a looming US deadline to increase tariffs on automobiles. The development marks a positive step in transatlantic trade relations and contributed to broader market optimism in the session.

South Korean stocks rose more than 6%, helping the broader MSCI Asia Pacific Index gain 1.2%. Shares of Samsung Electronics climbed as much as 7% after the company reached a last-minute agreement with its labour union to avoid a strike.

The US Dollar Index traded softer near 99.1, as improving market sentiment around US-Iran diplomatic progress weighed on safe-haven demand.

The rupee closed 29 paise weaker at 96.83 against the dollar, marking a fresh all-time low. The sharp rupee weakness likely reflects persistent FII outflows, elevated crude prices, and safe-haven demand for the dollar amid global risk-off sentiment.

Nifty registered a smart intraday recovery of nearly 300 points from the morning low of 23,397, finally settling at 23,659, up 41 points. Despite negative cues, Nifty has managed to absorb supply at lower levels and is forming higher lows on a short-term time frame. The rebound was largely supported by buying interest in the oil and gas, financial, and automotive sectors, offsetting broader weakness seen in Asian markets.

Support for the index now moves up to around 23,370. A close above the 23800 resistance could extend the pullback towards the next resistance placed near 24,030.

Indian markets are set to open higher on conducive global cues.

Source : Equity Bulls

Keywords

Nifty Sensex DowJones HDFCSecurities