Indian shares rise on Mideast peace hopes; banks lead gains

Indian shares erased early losses to end higher on Monday on hopes of easing Middle East tensions, with bank stocks leading gains after several lenders reported strong March-quarter loan growth.

The Nifty 50 rose 1.12% to 22,968.25 and the Sensex added 1.07% to 74,106.85, after falling as much as 0.7% and 0.8%, respectively, during the day.

Fifteen of the 16 major sectors rose. The broader small-caps and mid-caps gained 1.3% and 1.5%, respectively.

The United States and Iran received the framework of plan to end hostilities but Iran rejected immediately reopening the Strait of Hormuz after President Donald Trump threatened to rain “hell” on Tehran if it did not make a deal the end of Tuesday.

Benchmark stock indexes in India reversed course following the report, while Brent Crude oil prices fell from $110 per barrel to $107.

“This is purely a headline-driven market as investors remain on edge over the Middle East war. If the report about peace plan solidifies, we could see Nifty rising towards 23,300 level,” said Sunny Agrawal, head of fundamental equity research at SBICAPS Securities.

“The buy-on-dips trend seen in last couple of sessions and encouraging provisional quarterly updates from companies also aided investor sentiment,” Agrawal said.

Financials rose 2.3%, led by 2.7% jump in HDFC Bank and 2.9% gains in Bajaj Finance. Axis Bank added 4%.

“Pre-result updates suggest a continued sequential pickup in loan growth, (while) most banks have also reported a similar uptick in deposit growth,” Investec said.

Oil-to-telecom conglomerate Reliance Industries shed 3.4% to close near one-year low as analysts flagged hit to refining margins after the government imposed export tax on diesel last week.

Apparel retailer Trent, real estate company Sobha and D-Mart operator Avenue Supermarts jumped 8%, 5.8% and 4.3%, respectively, after reporting robust business growth in March quarter.