Indian markets soar as US-Iran deal cools geopolitical tensions

Indian equity markets surged, with Sensex and Nifty up nearly 1.5%, driven by a landmark US-Iran peace deal. The diplomatic breakthrough eased geopolitical tensions, causing a sharp fall in global oil prices and boosting investor sentiment.

Indian equity markets witnessed a strong bullish momentum on Monday morning, opening significantly higher and trading firmly in the green. The BSE SENSEX stood at 76,656.61 points, marking a substantial jump of 1128.66 points or 1.49 per cent. Similarly, the NSE NIFTY 50 climbed 350.40 points or 1.48 per cent to trade at 23,973.30 points.

The sharp rally follows a significant overnight de-escalation of geopolitical tensions in West Asia and a subsequent slide in global oil benchmarks, boosting investor confidence across Asian markets. The primary catalyst for the widespread market optimism is the landmark diplomatic breakthrough between the US and Iran. Earlier, United States President Donald Trump on Monday announced the completion of the peace deal between the US and Iran, declaring the reopening of the strategically important Strait of Hormuz and the immediate removal of its naval blockade, a move he said would restore the free flow of global energy supplies.

Expert Analysis on US-Iran Breakthrough

Ajay Bagga, banking and market expert, highlighted the profound impact of the geopolitical developments on global economic structures. "Indian markets partly rallied on these hopes on Friday and are expected to open more than a 1% up this morning on the back of the Iran peace deal and falling oil prices," Bagga said.

He noted that a major uncertainty hanging over the international financial system has begun to dissipate, paving the way for renewed risk appetite among global participants. "A big overhang on the global economy is lifting this Asian morning. The US and Iran have announced an agreement to sign a MOU on June 19 th at Geneva." Bagga said.

At the time of filing, Brent crude plummeted 4.70 per cent to USD 83.23 per barrel, while Crude Oil fell 5.15 per cent to USD 80.51 per barrel. At the same time, safe-haven Gold surged by 103.66 points or 2.46 per cent to USD 4,325.66.

"Immediate cessation of military actions followed by a speedy lifting of the US naval blockade and reopening of a toll free Strait of Hormuz is on the anvil," he added.

Across Asia, the market sentiment remained overwhelmingly positive, with Japan's Nikkei 225 surging 4.81 per cent, South Korea's KOSPI rising 5.32 per cent, and India's GIFT NIFTY advancing 1.35 per cent to 23,952.00 points.

The US Markets section displays positive movement across major indices. The Dow Jones Futures index stood at 51,640.72, marking a positive change of 438.46 or (+0.86%). Additionally, the S&P 500 index stood at 7,431.46, reflecting an increase of 37.16 or (+0.50%). Finally, the Nasdaq index stood at 25,888.84, showing a gain of 79.18 or (+0.31%).

Caution Advised Amid Optimism

However, Bagga cautioned that several geopolitical risks persist despite the initial optimism. He noted that specific regional actors and hardline factions continue to pose a challenge to the durability of the diplomatic arrangement.

"Israel, Iranian hardliners and US hawks who see this as an incomplete deal remain the threat. Iran has called for lifting of the blockade, ceasing of military actions across the region and payment of $24bn of seized Iranian funds as a redline precondition," Bagga stated.

He explained that following the formal finalization on Friday, specialized working groups will commence a 60-day evaluation framework centered on long-term regional stability and strategic concessions. "Post the Friday signing, technically work groups will start 60 day discussions for a nuclear disarmament of Iran to ensure its enriched uranium is monitored and no more enrichment / weaponisation happens . Iran will ask for sanctions relief and a restitution package in return," Bagga stated.

He mentioned that Israel is not a party to the deal and will be worried by this outcome. "SpaceX's strong debut keeps the AI momentum strong and the markets will load on steroids and try to take out all time highs in the US once again over the next few days" he added.

"For now, the peace dividend is providing rich pickings for risk-on investors who have stayed the course."

Technical Outlook

From a technical standpoint, Shrikant Chouhan, Head Equity Research, Kotak Securities, detailed the technical chart formations, indicating that the multi-day consolidation has given way to an established upward trajectory. "Technically, on daily charts, it has formed a strong reversal pattern, and on weekly charts, it has formed a long bullish candle, which is largely positive," Chouhan said.

" For positional traders, now, 23,500/74800 and 23,350/74300 would act as key support zones. As long as the market is trading above these levels, the uptrend is likely to continue," he added.

Chouhan noted that on the higher side, it could continue rallying till 23,850/75900 and 24,000-24100/76300-76600. However, below 23,350/74300, the uptrend would become vulnerable. Below this level, traders may prefer to exit their long positions.

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)