Hopes of a US-Iran truce and expectations of a broader peace deal, combined with softer crude prices, fuelled the rally in the Indian equity market, marking the highest single-day gain in the past two months. A significant driver of the rally was aggressive short covering, as traders rushed to unwind bearish bets in the face of rising prices.
The BSE Sensex jumped 1,695.40 points, or 2.30 per cent, to close at 75,527.95, while the Nifty rose 461.30 points, or 1.99 per cent, settling comfortably above the 23,600 mark at 23,622.90. Today’s rise led to a surge in investors’ wealth, with the overall market capitalisation (m-cap) of BSE-listed companies increasing by ₹9.7 lakh crore in a single session, taking the total to ₹461.5 lakh crore.
Market Boost
“The sharp pullback in crude oil and indications from Iran that tensions may cool fuelled the rally in the market,” said Pratik Gupta, CEO & co-head, Kotak Institutional Equities. “The crude oil price is the real barometer, and its decline has reassured investors more than political rhetoric,” he added.
Crude oil slipped to a three-month low of $88 per barrel. This also helped the Indian rupee appreciate, ending at a one-week high of ₹95.11 against the US dollar.
“Normalisation of energy flows takes away one of India’s biggest macro risks. Softer crude eases the trade deficit, supports the rupee, reduces inflation risk, and lifts overall market sentiment,” said Anand Shah, CIO, PMS & AIF, ICICI Prudential AMC. He added that while this improves the backdrop for risk assets, a sustained pickup in FII inflows will likely hinge on a stronger recovery in growth and corporate earnings, which may take time to materialise.
While today’s development is positive, it is not a runaway trigger for Indian equities, said the CEO of a domestic brokerage firm. “Since we didn’t correct much earlier, the upside may be measured. It mainly removes a key downside risk, oil, currency pressure, and inflation, but factors like monsoon uncertainty and AI-led disruption in IT hiring still cap aggressive upside.”
Meanwhile, on Friday, the broader market outperformed frontline indices, indicating a strong risk appetite among investors. The Nifty Midcap 100 rose 2.43 per cent, while the Nifty Smallcap 100 advanced 2.80 per cent, reflecting widespread participation beyond blue-chip stocks.
Sectoral performance remained broadly positive, with all major indices closing in the green. The rally was led by rate-sensitive and domestic-facing sectors such as Nifty Realty, Financial Services, PSU Banks, Private Banks, and Consumer Durables, which gained between 2 per cent and 4 per cent. The Nifty IT index, however, was the only relative laggard, underperforming the broader market, although it still managed to end the session with modest gains.