Indian Equities Surge as US-Iran Tensions Ease

Snapping a three-day losing streak, the benchmark equity indices jumped by up to 1.17%, in line with other regional peers that rallied after the US announced the passage of cargo ships with security and insurance guarantees through the Strait of Hormuz and the possibility of peace talks between the US and Iran, though Tehran denied such discussions. Brent crude prices remained volatile, trading in the $81–85 per barrel range. After declining 4% over the previous three trading sessions through Wednesday, in line with a global sell-off triggered by concerns over rising oil prices and the impact of the Iran war on supply chains, the Sensex jumped 899.71 points or 1.14%—marking its best single-day gain in a month—to close above the 80,000 mark at 80,015.90. The Nifty surged 285.40 points or 1.17% to end the day at 24,765.90. The India VIX index fell 15.52% to 17.86, indicating easing volatility. Investors’ wealth soared by Rs 5.7 lakh crore. In the previous three trading sessions, Rs 21.31 lakh crore of wealth had been wiped out. The US’ security and insurance guarantees for commercial shipping through the Strait of Hormuz helped ease concerns over potential disruptions to global oil flows and provided some relief to markets, said Siddhartha Khemka, Head of Research (Wealth Management) at Motilal Oswal Financial Services. Additional support came from reports suggesting that Iran may be exploring possible terms to end the conflict with the US and Israel, raising hopes of a potential de-escalation, although officials remain cautious and regional tensions persist, Khemka added. “The current base-case scenario is that the war will end in the next three to four weeks. If so, a deep market correction is unlikely. With US President Donald Trump’s mid-term elections coming up, there should be some sanity,” said George Thomas, fund manager at Quantum Asset Management Company. However, if the war extends, it could impact corporate earnings and lead to downgrades in the oil and gas sector, Thomas added. Sectors reliant on energy, such as cement and steel, may also see weak earnings for some more quarters, he said. In Asia, all major equity indices ended in the green. Leading the gains, South Korea’s Kospi index soared 9.63% on Thursday, marking its best single-day rise in 17 years. On Wednesday, it had slumped a record 12.06%. Taiwan, Thailand, Japan and Indonesia were among the other top gainers, rising by up to 2.57%. Market breadth was positive, with 2,804 gainers against 1,451 losers on the BSE. The broader BSE MidCap and BSE SmallCap indices rose 1.40% and 1.26%, respectively, outperforming the benchmarks. Except for IT, which witnessed profit booking (down 0.50%), all other sectoral indices closed in the green. Metal, consumer durables, auto, realty and oil & gas were the top performers, rising by up to 2.3%. Among Sensex stocks, Adani Ports, L&T, NTPC, Reliance Industries and BEL were the top gainers, advancing by up to 4.51%. Reliance Industries was the biggest contributor to the Sensex’s 900-point rally, accounting for 253 points, or 28% of the total gains. L&T and HDFC Bank together contributed 273 points, or 30%. Foreign portfolio investors sold shares worth Rs 3,752.52 crore while domestic institutional investors bought shares worth Rs 5 153.37 crore as per provisional data by the BSE.