Indian benchmark indices opened sharply higher on Monday, tracking a rally in global markets after the United States and Iran finalised a deal to end their 107-day war and reopen the Strait of Hormuz, easing concerns over global oil supplies.
The BSE Sensex surged 1,197.32 points, or 1.59 per cent, to 76,725.27 in opening trade, while the NSE Nifty climbed 361.95 points, or 1.53 per cent, to 23,984.85.
The upbeat opening came after US President Donald Trump announced that Washington and Tehran had finalised an agreement to end the conflict and reopen the Strait of Hormuz, a key shipping route through which nearly one-fifth of the world’s oil supplies pass. The agreement is expected to be formally signed in Switzerland on June 19.
Asian equities rallied as much as 2.4 per cent following the announcement, while Brent crude oil prices fell 4.1 per cent to around $84 per barrel, their lowest level since March.
Lower crude prices boost outlook for India
The decline in oil prices is seen as a major positive for India, the world’s third-largest oil importer, as it helps reduce inflationary pressures, supports the rupee and improves the country’s trade deficit.
“The diplomatic resolution in the Middle East reduces geopolitical risk, and the resulting crude oil price decline is especially beneficial to India, as it eases inflationary pressures and improves the macroeconomic outlook,” said Pravesh Gour, Senior Technical Analyst at Swastika Investmart.
Investors are also expected to focus on sectors that benefit from lower fuel costs. Oil marketing companies, airlines, tyre manufacturers and paint makers could see buying interest during the session.
Among individual stocks, Dr Reddy’s Laboratories will be in focus after announcing the first-to-market launch of Bosulif, a drug used to treat chronic myeloid leukemia, in the US market. Aurobindo Pharma may remain under pressure after the US Food and Drug Administration classified its Eugia Pharma manufacturing facility in Telangana as “official action indicated” following an inspection.
Markets extend last week’s gains
Monday’s rally extends the positive momentum from last week, when the Sensex gained 1,284.61 points, or 1.73 per cent, and the Nifty advanced 256.2 points, or 1 per cent.
According to market experts, investor confidence improved on optimism surrounding a potential US-Iran peace agreement and supportive measures announced by the Reserve Bank of India to attract foreign currency inflows.
The broader market also received support from strong gains among India’s most valuable companies. Eight of the top-10 most-valued firms added a combined ₹1.90 lakh crore in market capitalisation last week, led by ICICI Bank. HDFC Bank, State Bank of India, Bharti Airtel, Bajaj Finance, Larsen & Toubro, Hindustan Unilever and Reliance Industries also registered gains.
Despite Friday’s rally, foreign portfolio investors remained net sellers, offloading shares worth ₹10.82 billion. Domestic institutional investors, however, purchased equities worth ₹53.41 billion, according to provisional exchange data.
