The BSE Sensex was trading 1,026 points, or 1.24%, higher at 83,781. The Nifty50 was up 307 points, or 1.22%, trading at 25,553 around 3:05 pm.
Nifty Metal index rose 1.5%, helped by a weaker dollar, which makes the greenback-denominated assets more affordable to holders of other currencies. Meanwhile, Nifty Bank, and Financial Services also surged over 1%.
Factors:
1. Weaken Dollar
Market sentiment was lifted amid U.S. President Donald Trump criticised Federal Reserve Chair Jerome Powell as “terrible” and confirming that he is considering three or four candidates to replace Powell before his term ends in 2026. Media reports suggest Trump may act as early as September or October.
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These remarks raised concerns about the Federal Reserve’s future independence and triggered a decline in the U.S. dollar. The dollar index dropped 0.69% to 97.00, while the U.S. two-year Treasury yield fell to a seven-week low of 3.764%.Traders are now pricing in nearly a 25% chance of the Fed cutting rates in its end-of-July meeting compared to 12.5% last week, the CME FedWatch tool showed.
2. Easing Tensions in the Middle East
Indian markets have been reacting positively since the ceasefire between Israel and Iran, as the geopolitical de-escalation has eased concerns over oil supply disruptions and inflation. As India imports over 80% of its crude oil, a reduction in geopolitical risk supports a more stable inflation outlook and fiscal balance.
3. Oil Prices Drop
Crude prices, which had spiked during the height of the Israel-Iran conflict, have now cooled. Brent crude futures now fell to $67.57 a barrel, while U.S. West Texas Intermediate (WTI) dropped to $64.84.
In mid-June, Brent crude had surged nearly 13%, rising from below $70 to a high of $81.40 on June 23 amid fears that Iran might disrupt shipments through the Strait of Hormuz. The subsequent decline in oil prices has supported Indian equities by easing inflation and fiscal concerns.
