Sensex, Nifty targets: US-Iran ceasefire good news for India? DECODED

While the US-Iran ceasefire has resulted in a relief rally on Dalal Street, one key question remained unanswered. A couple of foreign brokerages such as Nomura and Jefferies raised it, raising fears the truce is fragile.

Nomura cited Iran’s Minister of Foreign Affairs as saying: “For a period of two weeks, safe passage through the Strait of Hormuz (SoH) will be possible via co-ordination with Iran’s Armed Forces and with due consideration of technical limitations”. The Japanese broker said it remains unclear under what terms ships can pass: whether they have to pay a toll to Iran.

It is also not clear how quickly the chokepoint will be reopened, a seemingly critical criteria given Trump said the ceasefire was contingent on Iran “agreeing to the complete, immediate and safe opening” of Hormuz.

"Then there is the question on whether the ceasefire will hold, given Iran’s leadership has likely become less centrally controlled and coordinated after the many decapitations, especially if Israel continues to attack Iran and /or its proxies," it said.

Jefferies said an apocalypse has been postponed. But the key issue for markets from the standpoint of energy prices is clearly the extent to which the Strait of Hormuz will now be truly opened, it said.

"The Truth Social statement of the 47th American president on Tuesday implies a full opening in the sense that Donald Trump said that “almost all of the various points of past contention have been agreed to between the United States and Iran”. Still the statement by the Iranian foreign minister on Tuesday implies something different altogether," it noted.

Jefferies said this the key reason why a risk premium in oil remains in place even though it is down sharply for obvious reasons. Brent crude oil is now at $96 per barrel, compared with a pre-war level of around $70 and $110 on Tuesday prior to Trump’s 8pm New York time deadline.

Emkay Global is optimistic. It said US-Iran ceasefire signals the end of the Gulf conflict and India benefits from a strong peace dividend. It believes Brent should settle at $75-80 over the next two months but could fall further once the Strait of Hormuz traffic goes back to normal and infrastructure damage is rebuild.

It said India’s macros are likely to be stressed through 1QFY27E, until energy markets normalize. However, it expects a recovery thereafter, with minimal likelihood of retail fuel price hikes.

"We see the US-Iran ceasefire as the harbinger of a final peace settlement, bringing normalcy to energy prices in 1-2 months. This is a catalyst for a breakout in Indian equities, with 13-15 per cent EPSg for the Nifty (FY25-FY27) and moderate valuations at 19 times PER (FY27E). Our Nifty target is now 29,000 for March 2027," Emkay said on Friday.

Meanwhile, Morgan Stanley on Thursday said India’s trailing market performance, valuations, positioning and earnings support a major recovery in Indian stocks over the coming months. The foreign brokerage said relative valuations are at previous troughs, as it retained its Sensex target of Rs 95,000 for December 2026.