Indian benchmark indices opened sharply higher on Monday, with the BSE Sensex surging 855 points to 76,270 and the NSE Nifty50 gaining 251 points to 23,971, moving closer to the key 24,000 mark. The rally added nearly ₹5 lakh crore to the market capitalisation of BSE-listed firms, taking the total valuation close to ₹468 lakh crore. Market breadth remained firmly positive with 2,116 stocks advancing against only 456 declines, indicating widespread participation. The surge was primarily driven by Brent crude futures dropping more than 5% to trade below the psychologically important $100 per barrel mark at around $98, following comments from US President Donald Trump who said Washington and Iran had "largely negotiated" a memorandum of understanding on a peace agreement that could reopen the Strait of Hormuz.
The rally in OMC stocks was driven by a decline in crude oil prices to below $100 per barrel, with Brent crude futures falling more than 5% to around $98 and US West Texas Intermediate dropping nearly 6% to $91.30 per barrel. The price decline followed comments from US President Donald Trump, who said Washington and Iran had "largely negotiated" a memorandum of understanding on a peace agreement that could reopen the Strait of Hormuz. Reports also indicated that negotiators had agreed on broad principles of a deal. The Strait of Hormuz remains one of the world's most critical shipping routes, handling over one-fifth of global oil and gas supplies. Any easing of tensions and resumption of normal trade flows through the route is viewed positively by global markets.
Oil marketing companies witnessed strong buying momentum with shares of Indian Oil, BPCL and HPCL rallying over 4% after crude oil prices declined sharply. Hindustan Petroleum Corporation Limited (HPCL) had previously led gains at 5.8% to ₹412.55 per share on May 25, while Bharat Petroleum Corporation Limited (BPCL) had followed with a 4.44% increase to ₹308.70 and Indian Oil Corporation (IOC) had jumped 3.90% to ₹144.95. According to reports from The Financial Express, the market reaction was immediate with Indian Oil Corporation climbing over 3.5% and HPCL surging nearly 5% intraday. BPCL also traded firmly in the green, surging 4% intraday as investors reacted positively to improving earnings prospects for oil marketing companies. Latest reports indicate that OMC losses have come down after the fourth fuel price increase on May 25, with OMC losses on petrol at approximately ₹10.50 per litre and diesel loss at ₹35.5 per litre.
In a bid to ease pressure on OMCs, the government announced a fourth hike in petrol and diesel prices today, with diesel prices increasing by ₹2.71 per litre and petrol by ₹2.61 per litre. According to The Financial Express, this brings petrol prices in Delhi to ₹102.12 per litre from ₹99.51 earlier, while diesel prices increased to ₹95.20 per litre from ₹92.49. The cumulative increases since fuel rate revisions resumed on May 15 after a prolonged freeze now amount to nearly ₹7.5 per litre. JM Financial had previously stated that OMCs need fuel hikes of ₹6-9 per litre to avoid EBITDA loss and ₹14-17 per litre to earn normalised EBITDA. The recent weakness in the Indian rupee also added to pressure as crude oil purchases are made in US dollars.
The broader market rally was supported by a sharp strengthening of the Indian rupee, which opened 0.37% higher at a two-week high of 95.34 against the US dollar, compared with its previous close of 95.69. The rebound followed a series of record lows witnessed in recent sessions. Among Sensex constituents, Mahindra & Mahindra, Bajaj Finance, HDFC Bank, Larsen & Toubro, Bajaj Finserv, Eternal, Maruti Suzuki and UltraTech Cement rose around 2% each and led the gains. Investor sentiment also improved sharply as India VIX, the market's volatility gauge, tumbled over 4% to 17.15, indicating easing market volatility. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that falling crude and a strengthening rupee could potentially alter market sentiment, with crude having dipped by $5 to below $100 on expectations that US and Iran are close to a deal.
