West Asia Peace Developments Spark Global Market Rally

Markets Rally as US-Iran Deal Progress Lifts Sentiment

Stocks surged on Monday as optimism about an impending US-Iran deal cooled crude prices and lifted markets worldwide. A 35 paise gain in the rupee and intense buying in financial stocks also bolstered sentiment among traders. Brent crude oil fell 5% to $94.5 per barrel after US President Donald Trump indicated significant progress toward a peace deal that would reopen Iran's Strait of Hormuz, a vital artery of global energy movement.

Despite Trump later stating that the US will not rush into any deal, investors believe a resolution to the conflict is at hand. This optimism is reflected in the performance of Indian indices, with the Nifty and Sensex rising 1.32% and 1.42% respectively on Monday, closing at 24,031.70 and 76,488.96, their highest close since 15 April.

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The gains were broad-based, with the Nifty midcap index closing 0.94% and the Nifty smallcap index closing 1.2% higher. All sectoral indices except the Nifty FMCG index closed in the green. The BSE's market capitalization increased by ₹5.8 trillion to ₹468 trillion.

Global indices also rose, with Japan's Nikkei 225 index closing 2.9% higher, China's CSI 300 index 1.6%, and Hong Kong's Hang Seng index 0.9%. Investors are looking through near-term volatility to assess margin resilience, pricing power, cost absorption, and the durability of growth, said Saurabh Patwa, head of equity and portfolio manager at Quest Investment Managers.

With most of the March quarter earnings out, markets are becoming increasingly stock-specific, Patwa said, rewarding companies with medium-term earnings visibility despite supply-chain disruptions and inflationary pressures. Foreign portfolio investors (FPIs) net bought shares worth ₹704 crore, while domestic institutional investors (DIIs) net bought shares worth ₹3,717 crore, provisional data from the National Stock Exchange (NSE) showed.

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Large-cap earnings growth slowed in the March quarter, weighed down by base effects, input costs, and global demand softness, PL Asset Management said in a report. In contrast, mid- and small-caps are accelerating strongly, driven by genuine margin expansion and operating leverage rather than just revenue tailwinds, the report added.

Overall, Nifty earnings growth is still projected at a healthy 14.3% for FY27 and 15.8% for FY28, with relatively few companies seeing meaningful earnings downgrades, said Seshadri Sen, head of research at Emkay Global. Nearly 44% of the 500-stock universe is still expected to deliver over 25% earnings growth in FY27, Seshadri added.

However, along with expensive crude, weakness in the Indian rupee remains a concern, which may keep foreign investors cautious toward Indian equities, said Sachin Gupta, VP—Technical Research at Choice Broking. In addition, uncertainties related to monsoon conditions, food inflation, and slower corporate earnings growth could keep markets volatile, Gupta added.

In the five months of 2026, FPIs have net sold ₹2.27 trillion from Indian equity markets, higher than ₹1.6 trillion which they sold in all of 2025. Meanwhile, DIIs have net bought ₹3.8 trillion in 2026.