rallied on Monday as easing tensions in West Asia and a sharp fall in crude oil prices lifted sentiment, with investors betting that lower energy costs could improve India’s macroeconomic outlook and revive foreign portfolio inflows.
The gained 231 points, or 0.98 per cent, to close at 23,853.90, while the rose 736.41 points, or 0.97 per cent, to 76,264.33, with buying seen across sectors led by realty, automobiles, metals and capital goods.
, its lowest level in nearly two months. The Indian rupee strengthened sharply against the US dollar, up 40 paise to trade close at ₹94.71.
For India, the conflict in West Asia is predominantly viewed as an “energy crisis,” said Trideep Bhattacharya, President and CIO – Equities, Edelweiss Mutual Fund. “We’re optimistic that a US-Iran deal could remove a fiscal drag of roughly 0.5-0.8 per cent of India’s GDP by lowering oil prices.”
India VIX, the market’s volatility gauge, came back close to pre-conflict levels of around 14, reflecting easing investor anxiety as the geopolitical risk premium receded. The US President made the announcement on Sunday evening, with the the peace agreement to be signed on June 19 in Switzerland.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments said the GDP growth rate and CPI inflation projections for FY27 can be revised in this changed scenario to 6.9 per cent and 4.6 per cent respectively, which will have positive implications for the stock market.
Rajesh Palviya, Head of Research at Axis Direct, said the easing of geopolitical tensions following the US-Iran peace agreement opens doors for global risk assets.
“The immediate correction in crude oil prices is particularly encouraging for an import-dependent economy like India, as it helps alleviate inflationary pressures, improves macroeconomic stability, and provides greater policy flexibility,” he said.
This could also bring in a sustained revival in foreign institutional investor (FII) inflows, which could act as the next catalyst for the market, Palviya said.
“The market’s strong performance reflected growing confidence that the immediate geopolitical crisis may be moving towards a more stable phase. For now, the ceasefire agreement and reopening of a critical global energy corridor have materially improved the outlook for risk assets,” said Ponmudi R, CEO of Enrich Money.
With the immediate geopolitical shock showing signs of easing, investors are expected to gradually shift their focus back to domestic fundamentals, including the progress of the monsoon, June-quarter earnings and the trajectory of foreign portfolio flows. However, developments in West Asia, particularly around Iran’s nuclear programme and Israel’s military operations in Lebanon, will remain key risks for global markets.