Indian markets staged a strong recovery on Monday, with the Nifty 50 rising 0.78% to 23,951.70 and the BSE Sensex adding 0.84% to 76,705.34 by 9:51 a.m. IST. This marked a turnaround after five consecutive sessions of declines, as reported by Reuters. All 16 major sectors logged gains, with the broader small-caps and mid-caps rising about 1.2% each. The recovery was supported by a post-results rally in several companies, including Tata Consumer and NTPC, while lenders IDFC First Bank and AU Small Finance Bank jumped 6.2% and 4% respectively on robust quarterly results.
Global oil prices fell sharply on Thursday, with Brent crude futures down $1.29, or 1.42%, at $89.45 per barrel after giving up part of the previous session's sharp gains. US West Texas Intermediate crude slipped 56 cents, or 0.66%, to $83.90 per barrel. The easing of tensions prompted investors to unwind the geopolitical risk premium that had pushed oil prices to multi-month highs during the previous week. International benchmark Brent crude futures had briefly touched $100 per barrel last week as the conflict extended beyond the Strait of Hormuz into the Red Sea, raising fears of disruptions to crude exports from the Middle East. As reported by Angel One News, the easing of tensions prompted investors to unwind the geopolitical risk premium that had pushed oil prices to multi-month highs during the previous week. Iran also indicated it would suspend retaliatory attacks as long as the US maintained its pause, although both sides stated they remain prepared to resume military action if negotiations fail.
The divergence in stock performance reflects the fundamental differences between upstream and downstream oil companies. Oil India, as an upstream explorer and producer, fell as much as 2.55% to an intraday low of ₹438.50 on Monday, tracking the sharp decline in global crude oil prices. In contrast, oil marketing companies (OMCs) gained significantly, with BPCL, HPCL and Indian Oil rising by 1%–2% according to Reuters. Oil marketing companies typically benefit from lower crude prices as they reduce raw material costs and can support refining margins. The IT index rose 2.5%, led by a 3.2% gain in Infosys after Jefferies upgraded the sector to "neutral" from "underweight."
The decline in crude prices provides relief to India, the world's third-largest oil importer, by potentially easing inflation concerns and supporting economic growth. According to IG Markets analyst Tony Sycamore, "hopes are growing" for a diplomatic solution following the weekend ceasefire between US and Iran after two weeks of attacks. A return to the 14-point MOU (memorandum of understanding) with more clarity on control of the Strait of Hormuz would be a good starting point for resuming normal shipping operations. However, analysts warn of potential challenges ahead. As per Brickwork Ratings, "For India, this reversal is a concern that warrants close monitoring. In case of a sustained return of crude prices toward the $90+ mark will put upward pressure on domestic fuel costs and broaden into headline inflation, which in turn narrows the Reserve Bank of India's room to cut interest rates further." According to Sachin Gupta, vice president of research at Choice Broking, "Positive global cues and strong domestic institutional buying could support sentiment at the opening, although resistance near the 24,000 zone may limit aggressive upside." The Nifty faces overhead resistance near the 24,000 level; a close above this could trigger further short covering, while a decisive slide below the immediate support of 23,600 may open the door to a larger downside in the near term.
