Sensex, Nifty Set For Gap-Up Start; Crude Slides As US-Iran Pact Nears

Indian benchmark indices are set for a strong opening on Monday, tracking a rally in global markets and a sharp decline in crude oil prices after reports of a breakthrough agreement between the United States and Iran aimed at ending hostilities and reopening the Strait of Hormuz.

GIFT Nifty was trading at 24,011 around 8:00 am, up 316 points or 1.35%, indicating a gap-up start for the NSE Nifty50 from Friday's close of 23,622.90. The positive momentum comes after domestic equities staged a sharp rally in the previous session, with the Sensex surging 1,695 points and the Nifty reclaiming the 23,600 mark.

Investor sentiment received a major boost after US and Iranian officials indicated progress towards a framework agreement that could pave the way for reopening the Strait of Hormuz, a critical shipping route that handles a significant share of global oil supplies. US President Donald Trump said the agreement included restoring access through the strategic waterway, while Iranian officials confirmed progress towards a broader peace arrangement.

The development triggered a risk-on rally across global markets. Japan's Nikkei advanced 3%, South Korea's Kospi surged 4.3%, while MSCI's broad Asia-Pacific index excluding Japan gained 1.5%. US futures also pointed to a positive start, with Nasdaq futures rising 1.5% and S&P 500 futures gaining 0.9%.

Crude Oil In Focus

Oil prices witnessed another sharp decline as fears of supply disruptions eased.

Brent crude fell 4% to around $83.80 per barrel, while WTI crude dropped 4.7% to nearly $80.90 per barrel. Both benchmarks had already declined more than 3% in the previous session and are now trading at their lowest levels since March.

The fall in crude prices is a significant positive for India, which imports the majority of its energy requirements. Lower oil prices help ease inflationary pressures, improve the current account balance, support the rupee and reduce input costs for companies.

The US dollar also weakened to a 10-day low against major currencies as improving risk appetite reduced demand for safe-haven assets. A softer dollar and lower crude prices are generally supportive for emerging markets, including India.

FII Selling Continues

Despite the improving global backdrop, foreign institutional investors remained net sellers. FIIs sold equities worth ₹1,082 crore on Friday, extending their selling streak to 13 consecutive sessions.

However, domestic institutional investors continued to provide support, purchasing shares worth ₹5,341 crore and helping absorb foreign outflows.

Technical Outlook

Shrikant Chouhan, Head Equity Research at Kotak Securities, said the market has formed a strong reversal pattern on daily charts and a long bullish candle on weekly charts, indicating a positive undertone.

According to Chouhan, 23,500 and 23,350 on the Nifty remain key support levels. As long as the index sustains above these zones, the uptrend is likely to continue. On the upside, Nifty could move towards 23,850 initially and potentially test the 24,000-24,100 zone.

For Bank Nifty, he identified 56,500 and 56,000 as important support levels, while resistance is seen in the 58,000-58,500 range.

Market participants will closely track developments around the proposed US-Iran agreement, crude oil prices and foreign fund flows as trading resumes after last week's strong rally.