Indian shares join global rally on hopes of Iran war de-escalation

India’s equity benchmarks closed higher on the first day of the new fiscal year following a tumultuous March, as remarks from the United States that indicated the Iran war could end soon pushed crude oil prices lower and sent shares climbing globally.

The Nifty 50 rose 1.56% to 22,679.40 and the BSE Sensex added 1.65% to 73,134.32 on Wednesday.

Fourteen of the 16 major sectors rose, with small-caps and mid-caps advancing 3.3% and 2.2%, respectively.

Other Asian markets surged 4.6%, the index’s biggest one-day increase since November 2022, and Europe’s STOXX 600 gained 2.1%.

Brent crude fell to $103 a barrel, following U.S. President Donald Trump’s talk of a war exit. Investors will now closely watch Trump’s update on Iran in an address on Thursday morning IST.

“We think markets are at levels where opportunities may emerge across sectors, though risks remain,” said Prateek Agrawal, managing director and chief executive officer of Motilal Oswal AMC.

The Nifty and Sensex lost more than 11% each in March, their biggest monthly loss in six years, with foreign investors offloading a record $12.7 billion.

If the Middle East situation is resolved, the rupee may appreciate and foreign investors, who bought Indian shares in February but sold in March due to the war, could return, Agrawal said.

The rising hopes of a resolution outweighed news of Indian fuel retailers raising prices of jet fuel and commercial liquefied petroleum gas, lifting shares of firms in the fertilizer, restaurant, tourism, and rice export segments.

Infrastructure major Larsen & Toubro, which has strong exposure to the Middle East, rose about 3%.

Heavyweights HDFC Bank and Reliance Industries added 1.5% and 1.9%.

Defence stocks soared 5.3% after defence acquisition council approved proposals worth 2.38 trillion rupees.

Budget airline IndiGo climbed 6%, after it appointed industry veteran Willie Walsh as new chief executive.

Bucking the trend, Hyundai Motor India dropped 3.3% after its March sales numbers disappointed investors.