Indian equity markets started the week on a strong note as the United States and Iran announced a framework agreement to end their more than 3-month-long conflict. Both sides confirmed that a formal Memorandum of Understanding is expected to be signed in Switzerland on Friday, June 19. 

As per a media report, this leaves a narrow window of 60 days to negotiate issues around Iran’s nuclear program that tormented Trump’s predecessors for years.

The Sensex zoomed nearly 1300 points (1.71%) to reach a high of 76,821.07, while the Nifty 50 comfortably topped the 24,000 mark, gaining 1.64% during early trades. Oil prices fell sharply to $83 per barrel, reflecting expectations that energy supplies could stabilise if the Strait of Hormuz reopens.

Trump’s Announcement

US President Donald Trump announced the breakthrough on his Truth Social platform, saying, “The Deal with the Islamic Republic of Iran is now complete. Congratulations to all! I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines. Let the oil flow! President DONALD J. TRUMP”

Iran’s Announcement

“A permanent and immediate end to the war has been declared on all fronts, including Lebanon,” Iran’s Deputy Foreign Minister Kazem Gharibabadi said in televised comments in the early hours of Monday. He also added that Tehran would enter a proposed 60-day negotiation period only after verifying that Washington had fulfilled its commitments.

Reopening of The Strait of Hormuz

One of the most important elements of the agreement is the proposed reopening of the Straight of Hormuz, which is largely closed currently. The critical global energy route is expected to open only after the agreement is formally signed on Friday.

Macro Economic Tailwinds For India

The deal is expected to boost India’s exports to West Asia, spur manufacturing activity and provide relief from high energy prices. Lower crude oil prices can ease pressure on India’s import bill, hence the Rupee; accelerate GDP growth and reduce inflation risks that had intensified during the conflict. It is also expected to ease supply chains and reduce freight and insurance costs.

However, the deal is not a full strategic reset yet. In the longer term, the impact will depend on whether Iranian crude can return to Indian refineries, whether shipping through Hormuz normalizes and if sanctions relief extends to projects such as Chabahar.

The Chabahar Port project is a strategic deep-water port on Iran’s Makran coast developed by India to bypass Pakistan and create a direct trade route to Afghanistan and Central Asia. India manages the Shahid Beheshti terminal under a 10-year contract but is navigating US sanctions that restrict trade, financial transactions, and commercial operations with Iran.

Hormuz matters more for LPG than for crude. India exports crude from around 40 countries, and non-Hormuz sourcing has risen to about 70% of crude imports from 55% earlier. However, the country imports about 60% of its LPG and nearly 90% of it passes through the Strait of Hormuz.