What Factors Are Guiding The Uptick In Indian Stock Market Amid High Uncertainty

The stock market on Wednesday saw strong momentum during the early trading hours, with the Sensex rising to as much as 82,957 while Nifty surged to 25,652 points.
While the former posted a surge of 700 points, the latter jumped up to 1 percent. The buying spree in the stock market was broad-based, as mid- and small-cap indices also rose more than half a percent.

However, the gains in the indices tapered down during the later part of the day. While Sensex was hovering at around 82,266 points with a gain of 0.05 percent, Nifty cooled down to 25,467, which was just 0.16 percent.

This increase led to a rise in the overall market capitalisation of BSE-listed firms to Rs 469 lakh crore, up from Rs 466 lakh crore during the previous session.

Some of the main factors guiding the stock market are the impact of AI on IT firms, the uncertainty over the future of import tariffs by the US, the geopolitical tension between the US and Iran, and the inflow of foreign capital after a period of outflow.

Since the inception of AI, IT stocks around the world have been under pressure. This has eroded the valuation of Indian IT majors to all-time lows.

However, Wednesday went easy for IT stocks after Anthropic announced collaboration with Salesforce, shifting negative sentiment towards enterprise tech firms.

Another favourable development came as the US Supreme Court struck down the imposition of import tariffs by President Donald Trump, although he has indicated he will not bow down and may continue the tariff war through other means.

The US is also embroiled in a tug of war with Iran. Trump has threatened military action against the West Asian nation if the latter does not agree to stop its nuclear programme. However, the recent easing of tensions may have played well for market sentiment.

The inflow of foreign capital after a seven-month streak of outflows has also given a boost to the market.

However, it remains to be seen how long the market will sustain these favourable conditions, as uncertainty on various fronts has not subsided.