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Stock markets jump 4% on US-Iran ceasefire; biggest single-day gain in 11 months
Sensex and Nifty rally over 3% after US-Iran ceasefire lifts sentiment, with oil prices falling and global markets turning sharply positive.
The BSE Sensex climbed 2,700 points to 77,325.58 and NSE’s Nifty 50 jumped almost 800 points to 23,922.
The Indian stock markets gained nearly 4% Wednesday, the biggest single-day gain in 11 months, after US President Donald Trump announced a two-week suspension of military strikes against Iran just hours before his deadline, and Iran agreed to open the Strait of Hormuz for shipments.
This led to crude oil prices falling sharply and provided relief to equity and currency markets across the world.
Buoyed by these developments, the Nifty 50 jumped 873.70 points or 3.8% higher at 23,997.35 points. BSE’s Sensex ended nearly 4%, or 2,946 points higher at 77,562.90 points. The rupee also gained 0.5% to the dollar, ending at 92.58.
Crude oil surged above $115 a barrel earlier in the session after reports of strikes on Iran’s Kharg Island — the hub of roughly 90% of Iran’s oil exports — before the diplomatic breakthrough reversed the move, according to Devarsh Vakil, Head of Prime Research at HDFC Securities. “If the war stops after two weeks, there’s no looking back for the markets. It will regain the losses suffered in the last one month,” said an analyst.
Crude oil prices are currently down to around $95/bbl.
Meanwhile, the RBI kept the policy rate unchanged at 5.25%, maintaining its ‘neutral’ stance, but cut the GDP forecast to 6.9% for from 7.6% a year ago due to the impact of West Asia conflict.
RBI Governor Sanjay Malhotra clarified that the recent curbs on banks dealing in foreign exchange were temporary measures to curb excessive volatility, and may be reversed if the situation is normalised. Bank stocks zoomed with both private and public-sector bank indices gaining over 5%.
Alongside banking and financial services, real estate and consumer durables were among the top performers. All other sectors saw gains as well.
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Hariprasad K, Research Analyst and Founder, Livelo, said the key trigger for Wednesday’s rally is the announcement of a two-week pause in US military action, alongside Iran’s agreement to facilitate safe passage through the strait. This has reduced immediate concerns around energy supply disruptions, which was a major overhang for global markets.
The Nifty VIX index, an indicator of market uncertainty, plunged 20% to its lowest level in three weeks. While the indices had been steady in the past few sessions after falling around 11% since the start of the war, VIX had remained elevated at its highest level since the pandemic.
Global cues also turned supportive after the announcement. Asian markets like Japan and South Korea gained nearly 7% earlier in the day.
The easing of geopolitical stress has led to a sharp fall in global crude oil prices, a positive sentiment for India from inflation and currency perspectives.
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On Wall Street, S&P 500 and Dow Jones futures jumped as much as 3%, and Nasdaq futures are up 3.5%.
“The ceasefire has reduced near-term geopolitical uncertainty, supporting risk-on flows into equities—particularly in emerging markets like India, which had witnessed record FII outflows in March. Additionally, the sharp correction in crude prices is a key positive for India, as it eases inflationary pressures, narrows the current account deficit, supports the rupee, and strengthens fiscal dynamics,” said Ajay Menon, MD and CEO of wealth management at Motilal Oswal Financial Services.
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