The domestic equity indices soared sharply in the early trade on Monday amid the announcement of a peace deal between the US and Iran. BSE Sensex rose 1,285 Points to an early high of 76,821.07. At the same time, Nifty50 surged 388 points to 24,011.40. A sharp decline in crude prices below $84 per barrel post the announcement drove the market sentiment high in early trade.
"Indian equity markets opened with a sharp gap-up, tracking a strong rally across global markets amid rising optimism surrounding the proposed U.S.–Iran peace agreement. Investor sentiment received a significant boost after U.S. President Donald Trump announced that the agreement is expected to be formally signed on Friday, raising hopes of a lasting de-escalation in the Middle East and improving global risk appetite," said Ponmudi R, CEO of Enrich Money.
Crude oil prices have declined sharply. Brent Crude, the global oil benchmark, were trading at the level of $82-84 per barrel in early trade, following the positive geopolitical developments.
"The substantial correction in energy prices is a major positive for the Indian economy, as it is expected to reduce the country's import bill, ease inflationary pressures, improve corporate profitability, and strengthen the broader macroeconomic outlook," Ponmudi added.
To Gainers And Losers
Except for Sun Pharma, all other stocks from the Sensex basket were trading high in early trade, with Indigo, Eternal, Bajaj Finance, Bajaj Finserv, UltraTech Cement, and Larsen & Toubro being the gainers.
US-Iran Deal
The US and Iran have finalised a deal to end their 107-day war and reopen the Strait of Hormuz, a narrow waterway used to transport a fifth of the world's oil, after signing the agreement in person in Switzerland on Friday.
US President Donald Trump announced on Twitter on Sunday evening, easing pressure on the global energy market. Officials said the peace agreement would be signed in Switzerland on June 19.
"With the dawn of peace in West Asia, hopefully, and the consequent sharp correction in Brent crude to below $84 in early trade, the prospects for the Indian economy and stock market have turned for the better. The GDP growth rate and CPI inflation projections for FY 27 can be revised in this changed scenario to 6.9 per cent and 4.6 per cent, respectively. This will have positive implications for the stock market," said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
"The rupee is likely to continue its uptrend, dipping below 95 to the dollar. With the rupee stabilising, FPIs are unlikely to continue big selling in India even though the AI trade continues to be strong, particularly in South Korea and Taiwan," Vijaykumar noted.