Shares Surge at Pre-open as Sensex, Nifty Set for Strong Start on Initial Iran Peace Deal

Mumbai, June 15: Indian shares surged at pre-open signalling a strong start for benchmark indices as Iran and US announced a preliminary deal ending the war and causing oil prices to crash. 

Nifty 50 traded 1.7% higher at pre-open while the Sensex rose 1.3% even as Gift Nifty surged 1.7%. 

Spotlight will be falling on oil marketing companies, airlines, tyre manufacturers and paint makers as crude oil prices tumble, easing concerns over input costs and supporting margin outlooks.  

Dr. Reddy’s Laboratories and Aurobindo Pharma will also remain in focus. Dr. Reddy’s Laboratories announced the U.S. launch of Bosulif (bosutinib), becoming the first company to bring the chronic myeloid leukemia treatment to market following the drug’s loss of exclusivity. Aurobindo Pharma said the U.S. Food and Drug Administration classified its subsidiary Eugia Pharma’s manufacturing facility in Telangana as “Official Action Indicated” (OAI) following an inspection that resulted in 11 observations. 

As for global cues, Asian equities surged in trade as investors welcomed signs of de-escalation in the Middle East. Japan’s Nikkei soared more than 5%, while South Korean shares posted similar gains. MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 2.6%. 

Market sentiment improved after Washington and Tehran reached a framework agreement aimed at ending hostilities and reopening the Strait of Hormuz, a critical shipping route through which a significant portion of the world’s oil supply passes. 

A sharp decline in oil prices further lifted investor sentiment. Brent crude dropped nearly 5% to around $83 a barrel, while U.S. West Texas Intermediate fell below $81 as traders unwound the geopolitical premium built into prices during the recent conflict. 

The decline in crude is particularly encouraging for India, which imports the bulk of its oil requirements. Lower energy prices could ease inflationary pressures, improve the country’s trade balance and reduce input costs for several sectors, including aviation, chemicals, paints and consumer goods. 

The positive momentum extended to U.S. markets, with S&P 500 futures advancing more than 1% during Asian trading hours. 

The gains follow a strong finish on Wall Street on Friday, when all three major U.S. indices ended higher amid growing optimism that tensions in the Middle East were moving toward a resolution. Investors also welcomed the prospect of lower oil prices and reduced risks to global economic growth. 

European equities had already reflected the improving sentiment at the end of last week. The pan-European STOXX 600 index climbed nearly 2% on Friday as hopes of a diplomatic breakthrough in the Middle East boosted risk assets across the region. 

The strong close in Europe, coupled with gains in U.S. equities and the sharp rally across Asia, provides a supportive backdrop for Indian stocks at the start of the week. 

Source

• Exchanges