Oil Drop and Iran Talks Lift Indian Markets; Nifty Futures Up 1.4%

Indian stocks are set to open higher Friday, tracking gains across Asia. Oil prices fell after President Donald Trump cancelled plans to strike Iran, citing progress in talks.

GIFT Nifty futures traded at 23,483 as of 7:47 a.m. IST, pointing to a 1.4% gain for the benchmark Nifty 50 from Thursday's close of 23,161.6. Other Asian stock markets jumped 3.1%. Brent crude slipped below $90 a barrel, easing inflation fears that have weighed on the world's third-largest crude importer.

The drop in crude oil prices provided immediate relief. Trump said the U.S. and Iran could sign a peace deal as soon as this weekend that would reopen the Strait of Hormuz to shipping. Iran said it had not reached a final decision on an agreement.

"Easing geopolitical tensions has provided significant relief to energy markets, with crude prices falling sharply, which is positive for India," said R Ponmudi, chief executive officer at Enrich Money. "While a formal agreement is still pending, market participants will closely watch whether the easing geopolitical backdrop can trigger a meaningful turnaround in foreign portfolio flows."

The Nifty and Sensex have fallen 8% and 9.2% respectively since the Iran conflict began in late February. Higher oil prices stoked concerns over inflation, economic slowdown and corporate profitability, while triggering record foreign outflows. Foreign portfolio investors sold ₹1,987 crore ($207.52 million) worth of domestic equities on Thursday, taking year-to-date outflows to $30.6 billion.

A peace deal this weekend could reopen the Strait of Hormuz, through which about a fifth of the world's oil passes. For India, lower crude prices would directly improve the trade balance and ease pressure on the rupee. The next concrete marker is the weekend talks.