Indian shares end at 6-week high as banks gain, Iran peace hopes aid sentiment

Indian equity benchmarks closed at six-week highs on Tuesday, as bank shares rose on optimism over earnings and a partial rollback of curbs on rupee trading, while prospects of U.S.-Iran talks also helped.

The U.S. expressed confidence that peace talks with Iran would go ahead in Pakistan this week, and a senior Iranian official said Tehran was considering joining, as the end of a ceasefire loomed.

The Nifty 50 rose 0.87% to 24,576.60, and the BSE Sensex added 0.96% to 79,273.33. The benchmarks have risen 10% so far in April, after falling almost 11.5% in March.

The gains on Tuesday were broad-based, with 13 of the 16 major sectors advancing.

“The ceasefire and the evolving U.S.-Iran peace dialogue still carry significant uncertainty, and near-term market direction is likely to remain heavily influenced by developments in the Middle East,” said Amnish Aggarwal, co-head, institutional equities at PL Capital.

The Iran war-led spike in oil prices, which worsens India’s inflation and growth outlook, has triggered a foreign investor exodus from shares.

Heavyweight financials rose 1.2%, and banks jumped 1.4% after the Reserve Bank of India partially rolled back restrictions on rupee derivative trades imposed earlier this month to arrest the currency’s slide, a move initially estimated to lead to steep losses for banks.

HDFC Bank and ICICI Bank - two heaviest weighted benchmark stocks - jumped 2.1% and 2.4% on earnings optimism after they reported March quarter numbers over the weekend. ICICI Bank rose 0.7% on Monday, while HDFC Bank had dropped 0.6%.

The broader small-caps and mid-caps gained 0.9% and 0.5%, respectively.

Nestle India jumped 7.3% on quarterly profit rise.

On the flip side, SBI Life Insurance slumped 3.6% to be the top Nifty loser after a finance ministry official told ET Now the government has asked banks to not have exclusive tie-ups with insurers.