Indian stock markets staged a dramatic recovery on Wednesday, with the Sensex surging 958.11 points to 77,975.90 and the Nifty gaining 300.35 points to 24,333.15 as of 2:52 pm, after opening cautiously amid global uncertainty. According to reports from The Economic Times, the recovery came after markets slipped to an intraday low of 23,997.90 after opening at 24,171, but sentiment turned decisively positive following reports of a potential breakthrough in US-Iran negotiations. As per Axios, the United States and Iran are closing in on a one-page memorandum of understanding (MOU) aimed at ending the war and setting a framework for future negotiations, with the proposed deal including around 14 points being negotiated by US envoys and Iranian officials. U.S. President Donald Trump indicated a possible peace deal with Iran may be reached, citing "great progress" toward a comprehensive agreement, though Tehran has not reacted to Trump's comments on the negotiations yet. The latest developments show Trump said Tuesday he was pausing his effort to forcefully reopen the Strait of Hormuz to commercial ships, while China's foreign minister called for a comprehensive ceasefire following a meeting with Iran's foreign minister, which could be influential given China's close economic and political ties with Iran.
Brent crude dropped to $101.90 a barrel from more than $115 earlier this week, following Trump's announcement that he would pause "Project Freedom", an operation to help escort ships through the Strait of Hormuz, citing "great progress" toward a comprehensive agreement with Iran. According to The Economic Times, this sharp fall in oil prices boosted global sentiment, with South Korea surging 6.5%, while China and Hong Kong rose 1.2% each. Taiwan added 0.9% and Japan gained 0.4%, as reported by The Economic Times. For India, which imports over 80% of its crude requirements, the fall in oil prices represents a major macro positive, as it eases inflationary pressures, reduces the current account deficit and improves fiscal dynamics. The India VIX dropped 6.9% to 16.7, closing below 17 for the first time since the onset of the conflict, signalling lower near-term risk expectations. Oil prices briefly dove below $97 before returning above $100 after Trump threatened to start bombing "at a much higher level and intensity" if Iran does not accept the agreement.
Individual stock performance was driven by strong corporate earnings, with Hero MotoCorp rising 2.6% after beating March quarter profit estimates, driven by strong domestic demand. Coforge jumped 8% after reporting fourth-quarter profit that more than doubled, helped by a rise in order intake. However, Larsen & Toubro fell 2% after posting a quarterly profit drop amid the Middle East conflict, which has disrupted the conglomerate's projects. The broader market participation was strong, with all 16 major sectors logging gains and small-caps and mid-caps rising about 1% each. According to Reuters, the Nifty 50 rose 0.58% to 24,171 and the BSE Sensex added 0.53% to 77,424.36 as of 9:15 a.m. IST. Outside of earnings reports, companies with big fuel bills jumped on hopes that oil prices will continue to ease, with United Airlines gaining 5%, Carnival up 5.7% and Royal Caribbean rising 7%.
Aviation stocks surged after the government announced a credit guarantee scheme for airlines, providing sovereign-backed funding support that eases liquidity concerns for carriers hit by elevated fuel costs and disruptions linked to the West Asia conflict. According to The Economic Times, shares of InterGlobe Aviation and SpiceJet surged following this announcement. The government's move is seen as a key relief measure for carriers facing financial pressures from the ongoing conflict and elevated fuel costs. In contrast, upstream oil companies declined on expectations of lower realisations following the fall in crude prices, with Oil and Natural Gas Corporation falling 2.64%, while Reliance Industries and Larsen & Toubro also traded lower.
According to The Economic Times, the rebound helped shrug off the recent lethargy in Indian markets, with the recovery pushing the Nifty above the 24,000 levels and surpassing 24,300 levels. Nilesh Jain, vice president and head of technical and derivative research at Centrum Finverse, noted that the Nifty was struggling to sustain at higher levels in the past eight sessions and the rebound pushed it above a cluster of averages. Jain expects the index to move toward 24,500-24,600 levels in the near term, supported by follow-through buying, with dips likely to be bought. The easing in oil prices sparked buying across rate-sensitive and domestic sectors, including financials, realty, pharma and auto stocks, with broader markets also showing strong participation, indicating improved risk appetite. In the bond market, Treasury yields sank as falling oil prices took pressure off inflation, with the 10-year Treasury yield dropping to 4.35% from 4.43% late Tuesday, which could bring down rates for mortgages and other loans to U.S. households and businesses.
