US-Iran ceasefire deal: The Indian stock market extended its rally on Wednesday, June 17, as investors continued to respond positively to the ceasefire agreement between the US and Iran.
Benchmark indices advanced for the fourth consecutive session, with the Sensex climbing over 250 points to trade around the 77,050 mark, while the Nifty 50 gained 55 points to hover near the 24,000 level.
The United States and Iran have reportedly reached a preliminary understanding to end the conflict in the Middle East and reopen the Strait of Hormuz, with a final peace agreement expected to be signed on Friday.
Once the deal is formally concluded, it is anticipated to pave the way for Iranian oil exports to re-enter global markets.
This fear has pushed crude oil prices to levels seen at the beginning of the Middle East conflict, which bodes well for import-oriented economies like India. On Wednesday, Brent crude futures slipped 0.28% to $78 per barrel, while WTI crude futures eased nearly 0.3% to $76 per barrel in Wednesday morning trade.
How may falling crude oil prices impact the Indian stock market?
According to market experts, markets are beginning to price in the possibility of a US-Iran ceasefire, with crude oil retreating, global risk sentiment improving, and the rupee showing early signs of recovery.
“For India, that would be a clear macro positive. As a large net importer of oil, elevated crude prices typically translate into higher inflation, a wider current account deficit, and pressure on the currency. A sustained moderation in oil prices could help ease inflationary pressures, support external balances, and provide policymakers with greater flexibility,” said Rohit Aggarwal – Founder & CIO of Ro Fund Management.
Aggarwal further explained that the benefits are likely to extend further to corporate India as well, as lower oil prices can improve cost structures in sectors like paint, plastics, rubber/ tyres and support demand, particularly in consumption- oriented sectors.
“If crude remains range-bound at lower levels, it could incrementally support earnings visibility for India Inc. India has been one of the worst affected countries by the war, and therefore we have most to gain,” he said.
Meanwhile, Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, believes that now with Brent crude sharply correcting to the $78 level, the macro headwind is out of the way. GDP growth can rise to the 6.9% level, bringing in 12% to 15% growth in corporate earnings in FY27 on top of the 15.6% rise in FY26.
“This augurs well for the market. Correction in crude prices have also led to stability in the the rupee, which can lead to tapering of FII outflows. Overall, the fundamentals and sentiments for the market have improved significantly,” Vijayakumar added.
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