Indian equities soar as Iran ceasefire sparks global rally

Indian shares surged on Wednesday as a plunge in oil prices after the U.S. and Iran agreed to a ceasefire sparked a global rally, while the domestic central bank left rates unchanged as it assessed the war’s impact on the economy.

The Nifty 50 rose 3.78% to 23,997.35, logging its best single-session gain in 11 months. The Sensex climbed 3.95% to 77,562.90 - its strongest day in five years.

Other Asian markets jumped 5%, while crude prices slipped 14% to $94 a barrel after the announcement of the two-week pause on attacks, with President Donald Trump saying talks were progressing toward a longer-term peace agreement.

The development eased fears of further escalation in the war, which had pushed oil prices above $100 a barrel, posing risks to the economy, corporate earnings and financial markets in the world’s third-largest oil importer.

“For markets, anxiety has eased for now as this breathing space has reduced immediate pressure and softened the weight of repeated threats,” said Dhananjay Sinha, chief executive and co-head of institutional equities at Systematix Group.

“While there are reasons to cheer the de-escalation in the near term, a steady recovery remains conditional on what happens next.”

The Reserve Bank of India Governor Sanjay Malhotra said the Iran war has dampened the country’s growth and inflation outlook and that the central bank remained vigilant to act preemptively on liquidity.

“The balanced weight on growth and inflation by the RBI hints at a prolonged pause, given the uncertainty over how the energy shock unfolds,” said Ankita Pathak, head of global investments at Ionic Asset.

The central bank’s view on pre-emptive liquidity management is also a positive, Pathak added.

All 16 major sectors advanced. The broader small-caps and mid-caps jumped 4.4% and 4%, respectively.

Heavyweight financials, gained 5.5%, while auto  and realty stocks rose about 6.8% each.

Among individual stocks, Larsen & Toubro, which has significant exposure to the Middle East, jumped 7.6%.

Budget carrier Interglobe Aviation, whose operations have been impacted by the conflict, climbed 8.1%.