West Asia conflict: Markets rebound further as easing crude lifts sentiment

Indices advance 3.5% in two sessions; gold prices rise again

Indian equities extended gains on Wednesday as crude oil prices softened amid US efforts to broker an end to the Iran conflict, although persistent geopolitical risks kept investors cautious. 

The Sensex, after surging as much as 1,781 points (2.4 per cent) intraday, settled 1,205 points (1.6 per cent) higher at 75,274. The Nifty 50 rose 394 points (1.7 per cent) to close at 23,307. Over the past two sessions, both indices have advanced 3.5 per cent. 

Investor wealth rebounded sharply, with the market capitalisation (mcap) of BSE-listed firms rising by ₹8.2 trillion on Wednesday to ₹431 trillion. Over the past two days, ₹15.8 trillion has been added back to mcap. 

The rally was supported by easing oil prices after reports that the US has drawn up a 15-point plan to end the conflict, with Pakistan acting as an intermediary. Brent crude was trading at $95.8 per barrel (as at 8.42 pm IST), down 0.87 per cent. 

However, safe-haven demand remained strong, with gold prices rising 1.8 per cent to $4,557.5 per ounce. 

Despite diplomatic efforts, uncertainty persists as the Strait of Hormuz — a key artery for nearly one-fifth of global oil supply — remains shut. The disruption has triggered one of the most severe energy supply shocks in recent history, fuelling concerns over inflation and global growth. Although crude oil has retreated from recent highs, prices are still about 27 per cent above 

pre-war levels.

 

Hostilities also continued on the ground, with Iran intensifying attacks on Israel and Gulf states, while Israel signalled it would press ahead with strikes. Iran, meanwhile, rejected the ceasefire proposal, calling US-led talks “illogical”.   

Analysts said markets will remain sensitive to developments in diplomacy and energy supply.

 

Brokerage Bernstein noted that a combination of weak domestic support in the US, rising military costs, elevated crude prices and the upcoming midterm elections could limit the conflict's duration, which may not extend beyond April.

 

“However, this has changed things structurally. Damage to some oil and gas infrastructure means the issue is no longer incidental to the Strait of Hormuz. Recovery may take anywhere from a few days (for facilities shut down as a precaution) to months (for those damaged),” the brokerage added.

 

“Moreover, we expect several nations to step up purchases and shore up petroleum reserves once the situation eases. All this means crude is likely to stay elevated this year, even though it returns below $100 a barrel.”

 

Market breadth remained strong, with 2,902 stocks advancing against 1,415 declines. HDFC Bank, which gained 2.2 per cent, contributed 213 points to the Sensex’s rise.

 

All sectoral indices on the NSE, led by consumer durables that climbed 3.5 per cent, ended in the green.

 

“Every day is a new day in markets post-Iran war. The sustainability of the bounceback hinges on a negotiated settlement to the current war. But it is a good time to deploy cash into stocks with a 12-24-month horizon. If you look at the history of wars, markets typically correct by 8-10 per cent during the conflict but rise significantly a year later. Now valuations have become reasonable,” said Jyotivardhan Jaipuria, managing director and founder of Valentis Advisors.