Indian equity benchmarks gained sharply on Friday amid hopes of easing geopolitical tensions in West Asia, lower crude oil prices and strength in the rupee.

The 30-share BSE Sensex pack surged 1,695.40 points or 2.30 per cent to settle at 75,527.95, while the NSE Nifty50 index jumped 461.30 points or 1.99 per cent to close at 23,622.90. The broader market outperformed the benchmark indices, with Nifty Midcap100 rising 2.43 per cent and Nifty Smallcap100 advancing 2.80 per cent.

Ankur Punj, MD & Business Head at Equirus Wealth, said, "A likely peace solution to the ongoing war between the US and Iran over the next few days fuelled a massive rally and pushed oil prices below the $90 per barrel mark."

He added, "Strong global market recovery triggered broad-based buying support, while a sharp recovery in the rupee against the dollar also aided sentiment. While the FII fund exodus from domestic equities remains a concern, the emerging peace deal significantly reduces the risk of renewed tension, offering overseas investors greater confidence to hold or even rebuild their positions in local shares."

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, said the recent sharp fall in crude oil prices has boosted market sentiment, with bulls taking charge.

Hariprasad K, Sebi-registered Research Analyst and Founder, Livelong Wealth, stated, "Indian equities witnessed a strong turnaround session today, marking one of the strongest bullish moves in recent sessions. The rally was driven by a sharp improvement in global risk sentiment, easing geopolitical concerns and renewed confidence across risk assets."

He also said, "The biggest trigger for today's move was the sudden shift in tensions in West Asia. Expectations of a potential diplomatic resolution between the US and Iran, along with the cancellation of planned military action, reduced fears of a wider conflict. This triggered a global risk-on rally, with investors moving back into equities after recent defensive positioning."

"As concerns around supply disruptions and Strait of Hormuz risks eased, oil prices corrected significantly. Lower crude prices directly benefit India by reducing import costs, easing inflationary pressure and improving the broader macroeconomic outlook," Hariprasad added.

He also stated that the rupee strengthened, trading near the 94.90 zone against the US dollar, supported by lower crude prices and improved global sentiment. Hariprasad noted that currency stability provides additional comfort for foreign investors and helps reduce pressure on India's external balances.

What's next for the stock market?

While Friday's rally reflected improving sentiment, Vinod Nair, Head of Research at Geojit Investments, said, "The year has been challenging for India, with the economy first steering the impact of US tariffs and subsequently contending under the energy-driven shock. While conditions on both fronts have improved, the economy still faces a demanding phase marked by inflationary pressures, weak monsoon, and a moderation in both global and domestic growth momentum."

He added, "A key near-term variable is the new policy direction of the US Fed under the new chair, with a revised framework. The upcoming Fed meeting is drawing heightened attention as markets assess the balance between growth and persistent inflation pressures. While the economic stance has emerged under elevated bond yields, resilient labour markets, and sticky inflation may limit the scope for aggressive easing, making the situation challenging."

Ajit Mishra – SVP, Research, Religare Broking, stated, "Market participants remain watchful of foreign institutional flows and further developments on the geopolitical front. Technically, Nifty has staged a decisive rebound after defending the crucial 23,000 support zone and reclaiming the key resistance area around 23,500, which coincides with the 20-day EMA. Sustaining above this zone could pave the way for a move towards the 23,800–24,200 band in the near term. On the downside, the 23,100–23,300 region is now expected to act as immediate support in the event of any profit-taking."