NEW DELHI: India's equity markets made a sharp recovery on Monday, with benchmarks—the BSE Sensex and the NSE Nifty—settling more than 1% higher each, as reports of a potential ceasefire between the US and Iran lifted sentiment. A rebound in the rupee following the Reserve Bank of India’s intervention with a slew of measures to restrict banks from onshore forward markets also provided support to the equity market.
The Sensex advanced by 787 points, or 1.07%, to settle at 74,106.85, while the Nifty gained 255 points, or 1.12%, to close at 22,968.25. In early intraday deals, the Sensex had plummeted to 72,728.66 while Nifty hit a low of 22,542.95. Broader markets mirrored the positive momentum, with the Nifty Midcap and Small Cap indices rising by 1.52% and 1.29%, respectively.
The rupee appreciated for the second straight session, closing at around 93.06 against the US dollar.
Vinod Nair, Head of Research, Geojit Investments said that crude prices softened marginally on reports of ceasefire efforts, while encouraging provisional banking data supported interest in rate‑sensitive segments. Brent crude prices were trading around $109 per barrel on Monday, while WTI oil prices, after hitting a high of $115.48 per barrel, fell to the $110 mark.
Nair added that overall risk appetite remains cautious due to persistent inflationary pressures and concerns over potential disruptions to global trade. He added that with the RBI policy, US CPI, crude trajectory, and geopolitical developments all converging this week, markets are likely to remain headline-driven.
"Given the deep discount in the broader market, there is meaningful upside potential if a credible ceasefire emerges, despite the prevailing sell‑on‑rise trend," stated Nair.
The upcoming monetary policy meeting of the Reserve Bank of India (RBI), scheduled for April 6–9, is expected to see the Monetary Policy Committee (MPC) maintain a pause on policy rates, even as inflation risks, currency pressures and global uncertainties intensify.
Siddhartha Khemka-Head of Research, Wealth Management, Motilal Oswal Financial Services stated that the Monday market rebound was supported by reports of potential US–Iran ceasefire talks, which improved global risk sentiment and eased concerns over prolonged geopolitical tensions. US President Donald Trump is scheduled to speak at the White House at 10:30 PM IST on Monday, as the 48-hour deadline given to Iran nears the end, keeping the near-term uncertainty elevated.
Overall, markets are likely to remain sensitive to developments in the West Asia conflict, movements in crude oil prices and trends in FIIs flows, while domestic macro indicators and currency movements will also be closely monitored for further market direction, added Khemka. The month of March witnessed massive selling by foreign institutional investors to the tune of Rs 122,182 crores, the biggest ever monthly selling by this category of investors.
Despite a sharp recovery in the past three sessions, equity benchmarks (Sensex and Nifty50) are down to the tune of 7-8% since the conflict escalated in West Asia on February 18. In the recently concluded month of March, the Nifty50 experienced a sharp decline and fell approximately 11.3% to 11.4%, marking one of the worst months in recent years.
Brent crude prices, which are hovering around $109-110 per barrel, are up around 60% since the US/ February 28. Higher oil prices for an import-dependent nation such as India are likely to translate into higher inflation in the coming months, exerting pressure on currency stability and corporate margins, thereby impacting overall equity market sentiment.
Global brokerage firms such as Nomura, Citi Research, Goldman Sachs and Bernstein have lowered their Nifty 50 targets, warning that a prolonged spell of high oil prices could trigger earnings downgrades and keep market sentiment under pressure.