June 15 (Reuters) – Indian shares climbed higher on Monday, tracking a global rally, as oil prices tumbled after the U.S. and Iran said an initial deal had been reached to end the war and resume traffic through the Strait of Hormuz.
The countries will sign a memorandum of understanding in Switzerland on Friday, said Pakistani Prime Minister Shehbaz Sharif, whose country served as a mediator in the negotiations.
The benchmark Nifty 50 was up 1.45% at 23,964, while the BSE Sensex added 1.54% to 76,679.37, as of 10:02 a.m. IST.
Other Asian markets jumped 2.9%, while Brent crude dropped 4.7% to about $83 a barrel, the lowest since March.
Lower oil prices are a positive for India, the world’s third-largest oil importer, as they help ease pressure on inflation, the rupee and the country’s trade deficit.
“With the dawn of peace in West Asia, hopefully, and the consequent sharp correction in Brent crude to below $84 in early trade, the prospects for the Indian economy and stock market have turned for the better,” said VK Vijayakumar, chief investment strategist at Geojit Investments.
India’s 10-year bond yield slid to its lowest level since March 25, while the rupee gained 0.52% to 94.6100 per dollar.
“With the rupee stabilising, foreign portfolio investors are unlikely to continue big selling in Indian (stocks) even though the AI trade still continues to be strong, particularly in South Korea and Taiwan,” Vijayakumar said.
FPIs have offloaded a record $30.7 billion of domestic equities so far this year.
Fourteen of the 16 major sectors advanced. The broader small-caps and mid-caps rose 1.6% and 1.4%, respectively.
HDFC Bank , the heaviest-weighted stock on the benchmarks, jumped 2% to lead gains.
Infrastructure major Larsen & Toubro , which has a significant revenue exposure to the Middle East, gained 3.3%.
Oil marketing companies, tyre makers, paint makers and airlines also jumped on a drop in crude prices.
In social media posts the day before, Donald Trump said the agreement would reopen the Strait of Hormuz.
Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema and Nivedita Bhattacharjee
