US President Donald Trump’s big signal to end the West Asia war and subsequent easing of Brent crude oil prices may further improve sentiments across Dalal Street. Experts feel that easing geopolitical tension will reduce the risk of interest rate hikes by lowering inflation, a big positive for emerging markets such as India.
“Pullback in crude oil prices definitely augurs well sentimentally for domestic equities,” Sunny Agrawal, Head - Fundamental Research at SBI Securities told TNIE. He added that the narrative of higher and longer interest rates will die down, thereby leading to a constructive framework for rate-sensitive (Banks, NBFC, Real Estate, Auto), crude oil/crude oil derivatives dependent sectors (Tyre, Paints, Airlines, Consumer Staples) and Middle East-heavy dependent businesses like L&T,” .
Agrawal also said that the rally, which till now is concentrated only in large caps, will spread across the broader market as global headwind recedes.
On Monday, the BSE Sensex added 107.25 points, or 0.13% to close at 81,106.65 while the Nifty50 index closed 58.25 points, or 0.23% higher at 25,044.65. On Tuesday, the market was closed. The positive momentum continued after the two benchmarks climbed more than 10% each in seven sessions, supported by record FII inflow and easing crude oil prices.
Trump on Monday said “Iran militarily is effectively over", and said that there is "positive momentum" behind negotiations to end the conflict which began on February 28, 2026, when the United States and Israel launched joint strikes against Iranian military infrastructure and leadership. Trump’s latest take on the situation came after his Republican Party faced defeat in US midterm elections.
Global oil prices, which have fallen sharply since the midterms, fell further after Trump's comments. Correcting 6% overnight, Brent crude prices fell below $90 per barrel on Tuesday. Global markets, including US futures, Japan and Korea were up between 2 and 4%.
Earlier, the conflict triggered supply chain disruption and a massive price shock, with Brent crude surging over 55% from around $72 to a peak of nearly $118 per barrel in March 2026 as Iran attempted to restrict or close the vital Strait of Hormuz.
For an oil-importing economy like India, sustained crude at higher levels increases inflationary pressures, widens the import bill, puts pressure on the rupee and squeezes corporate margins, thus making the local stocks unattractive for investors, especially the FIIs. India’s consumer price inflation increased to 5.54% in September from 4.82% in August. The rise in inflation had prompted the RBI to increase the repo rate in its October policy meeting.
