Nifty Surges Over 350 Points Amid Sharp Decline in Oil Prices Following Iran's Reopening of Strait of Hormuz

Global Markets React Positively as Iran Opens Strait of Hormuz, Oil Prices Plummet

On April 17, the GIFT Nifty Futures experienced a significant rally of over 350 points, tracking a 10 percent sharp correction in oil prices following the announcement of the opening of the Strait of Hormuz by Iran. This development comes as a result of the 10-day ceasefire between Israel and Lebanon, which was announced on April 16.

The Strait of Hormuz, a crucial waterway through which approximately 20 percent of the world's oil supply is transited, had been blocked by Iran since the beginning of the West Asia war. The traffic was almost halted even after the announcement of a ceasefire between the US and Iran on April 7. The blockage was the largest oil supply disruption in history.

Iran's announcement of opening the Strait of Hormuz route for all commercial ships during the 10-day ceasefire has brought relief to oil importers, including India, which imports 85-90 percent of its oil requirements. Any increase in oil prices raises inflation concerns, impacts earnings and economic growth, and disturbs the government's fiscal deficit math.

The opening of the Strait of Hormuz has resulted in a sharp correction in oil prices, with Brent crude, the international oil benchmark, tumbling 9.65 percent to $88.72 a barrel (at 22:18 hours IST). The oil prices had rallied to $119.5 a barrel on March 9 and then $119.13 on March 19 but have since formed a lower high-lower low structure and corrected by around $30 a barrel or more than 25 percent from the current year's high.

As a result, the GIFT Nifty Futures traded at 24,812, up 392 points (1.61 percent), indicating a positive trend in Indian equities. If this positive sentiment continues without any negative news or commentary from Trump or Tehran over the weekend, the Indian equity markets on Monday (April 20) may start the week on a healthy note amid a big relief in terms of declining oil prices.

Oil Price Comparison

| Oil Price | Date | Change | | --- | --- | --- | | $119.5 | March 9 | - | | $119.13 | March 19 | - | | $88.72 | April 17 | -9.65% | | $86.09 | April 17 (intraday low) | - |

Considering this, the possibility of the Nifty 50 hitting or surpassing long-term moving averages (100 and 200-day EMAs) or 24,700-24,800 levels on coming Monday cannot be ruled out, while the immediate support is placed at 24,200, according to technical experts.

On Friday, the Nifty 50 rallied 157 points (0.65 percent) to close at 24,354, and the BSE Sensex soared 505 points (0.65 percent) to 78,494, taking the total gains to nearly 10 percent from the war low seen on April 2 as there has been rising hope for a US-Iran peace deal.

The broader markets also joined the benchmarks and outperformed, with the Nifty Midcap and Smallcap 100 indices surging 1.27 percent and 1.48 percent, respectively, taking the total gains to over 15 percent from the April low.

Further, the buying of Indian equities by Foreign Institutional Investors (FIIs) in the last three days lifted sentiment. They net bought more than Rs 1,700 crore worth of shares in the last three days and brought the net outflow for the week to around Rs 250 crore in the cash segment, the lowest after several weeks. In March, they net offloaded more than Rs 1.22 lakh crore worth of Indian equities, the biggest-ever monthly selling, followed by over Rs 39,000 crore of outflow in the current month.