The report of a possible peace deal between the US and Iran raised hopes of reducing disruption in global oil supply and after a sharp fall in crude oil prices, Sensex and Nifty rose on Friday and ended the week on a strong note.
The BSE Sensex jumped 1,695.40 points or 2.3% to close at 75,527.95, while the Nifty 50 gained 461.30 points or 1.99% at 23,622.90.
Markets opened sharply higher with Sensex rising over 900 points and Nifty rising over 250 points in early trade, before the gains continued during the session.. Track live updates on the war
Progress in US-Iran talks
Investor sentiment improved after US President Donald Trump said progress has been made in talks aimed at ending the war on Iran.
According to Iran’s semi-official Mehr news agency, a draft agreement includes 14 provisions, including the reopening of the Strait of Hormuz within 30 days, the release of $24 billion in frozen Iranian assets and 60 days of negotiations on nuclear issues. A G7 official said an agreement could be signed as early as Sunday.
This development has raised hopes of an end to the war that has been going on for more than 100 days, which started when America and Israel attacked Iran without any provocation on 28 February. Since then the global energy supply has been disrupted.
oil prices fell
Crude oil prices fell sharply on Friday amid hopes that a deal could reopen the Strait of Hormuz, a key route for global oil and gas shipments.
International benchmark Brent crude fell 4.5% to $86.31 a barrel, while US crude fell 4.3% to $83.90 a barrel. Spot gold rose 0.2% to $4,221.46 an ounce, according to Bloomberg.
Why did the market rise?
The rally was largely driven by the sharp decline in oil prices.
The conflict in Iran led to the closure of the Strait of Hormuz in March, sending crude prices higher and adding to inflationary pressures globally. Any signs of waterways reopening are viewed positively by markets as they ease concerns over supply shortages.
Low oil prices are particularly beneficial for India, which imports most of its crude oil needs. Fall in crude oil prices could help reduce the country’s import bill, reduce inflationary pressures and reduce costs for businesses, thereby boosting investor sentiment.