MUMBAI: Indian shares rose to a two-week high on Monday as signs of progress in US-Iran peace talks pushed oil prices lower and boosted investor appetite for risk assets.
Market Rally Driven by Oil Price Decline
US President Donald Trump said on Saturday that Washington and Iran had 'largely negotiated' a memorandum of understanding on a peace deal that would reopen the Strait of Hormuz, which carried a fifth of global oil and LNG shipments before the war. The comments pushed Brent crude futures down 5.5% to $97.8 per barrel, its lowest in two weeks.
The Nifty 50 index rose 312 points, or 1.3%, to close at 24,032, while the Sensex added 1,074 points, or 1.4%, to finish at 76,489. Both benchmarks recorded their highest close since May 8.
Gains Capped by Caution
Gains, however, were capped as US and Iranian officials played down hopes for an imminent breakthrough, analysts said. Fifteen of the 16 major sectoral indices rose. The small-cap and mid-cap indexes gained 1.4% and 0.9%, respectively.
Heavyweight financials jumped 2.2%, led by private sector lenders HDFC Bank and ICICI Bank, which surged 2.6% and 2.3%, respectively.
Foreign Portfolio Outflows Continue
Foreign portfolio investors have offloaded domestic stocks worth $23.9 billion so far this year, surpassing last year's record annual outflows.
Oil Marketing Companies Rally
Oil marketing companies BPCL, HPCL, and Indian Oil—which together control 90% of India's fuel market—gained 4.3%, 3.5%, and 3.2%, respectively, after a sharp correction in crude oil prices and yet another rise in fuel prices on Monday.
Petrol prices were raised by Rs 2.6 per litre and diesel by Rs 2.7 per litre, marking the fourth increase in less than two weeks. The latest price increase took cumulative hikes since May 15 to nearly Rs 7.5 per litre.
