A sharp reversal is underway in global markets after U.S. President Donald Trump indicated a temporary de-escalation in the ongoing West Asia conflict, triggering a strong risk-on rally across asset classes.

GIFT Nifty surged up to 4.6% post-market hours on Monday, indicating a sharp gap-up opening for Indian equities after Monday’s brutal sell-off, where the Sensex plunged 1,836 points and the Nifty 50 slipped to 22,512.

As of 5:15 pm IST, GIFT Nifty was trading 3.72% higher at 23,300.

Trump says pause in hostilities

In a post on Truth Social, Trump said the United States and Iran had held “very good and productive conversations” over the past two days regarding a resolution of hostilities in the Middle East.

He added that he had instructed the Department of War to postpone all military strikes on Iranian power plants and energy infrastructure for five days, subject to ongoing discussions.

The statement marked a major shift from the escalation seen over the weekend, when threats to target critical infrastructure had rattled global markets.

Global markets flip to risk-on

The announcement triggered an immediate rebound in global equities.

US stock futures rallied sharply, with S&P 500 futures rising around 2%, Nasdaq futures gaining over 1.6%, and Dow futures up nearly 2%, indicating a broad-based return of risk appetite.

European markets also reversed early losses to trade higher, while the US dollar weakened as investors rotated back into risk assets.

Crude oil slides sharply

Crude prices, which had surged amid fears of supply disruption through the Strait of Hormuz, fell sharply following Trump’s announcement.

Brent crude dropped below the $100 mark after briefly reaching near $110-mark earlier in the day, with prices falling over 10% intraday as war risk premium unwound.

The decline in oil prices is a major relief for India, which is heavily dependent on energy imports.

From panic to relief

The sharp turnaround comes after a steep risk-off session on Monday, when Indian markets witnessed broad-based selling amid escalating geopolitical tensions, rising crude prices, and persistent foreign outflows.

The Sensex ended at 72,696.39, while the Nifty 50 closed at 22,512.65, with all sectoral indices finishing in the red.

Relief rally or temporary pause?

While the latest developments have eased immediate concerns around energy supply disruption, markets remain highly sensitive to geopolitical headlines.

The five-day pause in military action offers temporary relief, but investors will closely track whether negotiations translate into a sustained de-escalation.