Sensex jumped 1,155 points and Nifty gained 340 points as easing Iran-US tensions boosted global risk appetite.
Crude oil prices fell below $84 per barrel, while the Rupee strengthened against the dollar.
Banking stocks led gains as investors cheered improving macroeconomic and market conditions.
Indian stock markets opened sharply higher on Monday, tracking a global relief rally after reports of a peace agreement between the United States and Iran boosted risk appetite and sent crude oil prices sharply lower.
The BSE Sensex surged 1,154.98 points, or 1.53%, to 76,682.94 at the opening bell, while the NSE Nifty50 climbed 340.40 points, or 1.44%, to 23,963.30, placing the benchmark index within touching distance of the 24,000 mark.
1 June 2026
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Investor sentiment improved significantly after the United States and Iran reportedly agreed to a framework aimed at ending hostilities across the region, including Lebanon, and reopening the Strait of Hormuz, a critical route for global energy shipments.
US President Donald Trump said the agreement would restore access through the strategic waterway and bring an end to military operations. Iranian officials also confirmed progress towards a broader peace arrangement, with an official signing ceremony reportedly scheduled for June 19 in Switzerland.
Oil Prices Plunge
The biggest trigger for markets was the sharp decline in crude oil prices.
Brent crude fell 4% to around $83.80 per barrel, while WTI crude dropped 4.7% to nearly $80.90 per barrel. Both benchmarks have now fallen to their lowest levels since March after extending losses from the previous session.
The decline is a major positive for India, which imports the majority of its crude oil requirements. Lower oil prices help ease inflationary pressures, improve the current account deficit, strengthen the rupee and reduce costs for businesses.
Reflecting the improved outlook, the Indian rupee opened 41 paise stronger at 94.70 against the US dollar.
Global Markets Rally
The positive sentiment extended 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 strong start, with Nasdaq futures rising 1.5% and S&P 500 futures advancing 0.9%.
The US dollar weakened to a 10-day low against major currencies as investors moved away from safe-haven assets amid improving geopolitical conditions.
Focus On Banks
Market participants expect banking stocks to remain in focus following the RBI's recent measures to encourage foreign currency inflows through forex swap facilities linked to FCNR(B) deposits and external commercial borrowings.
The easing in crude prices, strengthening rupee and expectations of improving macroeconomic conditions are also expected to support sentiment in financial stocks.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the changing geopolitical environment has materially improved the outlook for India.
"With the dawn of peace in West Asia, hopefully, and the consequent sharp correction in Brent crude to below $84 in early trade, the prospects for the Indian economy and stock market have turned for the better. The GDP growth rate and CPI inflation projections for FY27 can be revised in this changed scenario to 6.9% and 4.6%, respectively. This will have positive implications for the stock market," he said.
Vijayakumar added that a stabilising rupee could reduce foreign investor selling pressure, while domestic institutional and retail investors are likely to continue supporting the market.
He expects banks to lead the rally, supported by attractive valuations and continued short-covering in major private-sector lenders.
Investors will now closely monitor the formal signing of the agreement, progress on reopening the Strait of Hormuz, foreign fund flows and the trajectory of crude oil prices for further market direction.
