Markets staged a sharp recovery on Monday, driven by a surge in global risk appetite after US President Donald Trump said over the weekend that a peace deal with Iran was “largely negotiated.” The prospect of easing West Asia tensions triggered an aggressive unwinding of the war premium in energy markets, pulling crude oil prices sharply lower and reviving broad-based buying across Dalal Street.

“Sentiment was primarily driven by optimism surrounding a potential US-Iran peace agreement, which triggered a sharp correction in crude oil prices...the outperformance of private banking majors, supportive earnings announcements, and the rupee’s further strengthening against the US dollar aided the recovery,” said Ajit Mishra, SVP-Research, Religare Broking.

The rupee appreciated for the third straight trading session and ended at an over 2-week high, the rally supported by easing crude oil prices and renewed optimism around a potential US-Iran agreement. It was also supported by RBI Governor, Sanjay Malhotra hinting, in an interview, that the rupee may be actually undervalued rather than overvalued. Weakening dollar, rise in domestic equities also supported the rupee rise. The rupee ended at 95.23, up 46 paise from Friday. The currency has appreciated 1.8 per cent from the low it hit last week.

The Nifty 50 closed at 24,031.70, up 312.40 points or 1.32 per cent, after touching an intraday high of 24,054.45 — its first sustained close above the psychologically significant 24,000 mark in recent sessions. The BSE Sensex settled at 76,488.96, gaining 1,073.61 points or 1.42 per cent. The Bank Nifty outperformed, surging 1,238.30 points or 2.29 per cent to close at 55,293.65, breaching the 55,000 level intraday.

The primary trigger was the sharp fall in crude prices. US crude dropped over 5.5 per cent to below the $92 mark, while domestic crude futures slipped below ₹8,800, as markets began pricing in a possible reopening of the Strait of Hormuz — a critical energy transit route handling nearly one-fifth of global oil and LNG shipments. Brent crude slipped below $96 per barrel.

Banking and financial stocks led the rally. PSU Bank index surged 3.10 per cent, while private sector heavyweights including HDFC Bank, ICICI Bank, and Axis Bank saw strong institutional buying. Other sectors that ended with gains include Auto, Realty, Chemicals, Oil & Gas, Consumer Durables, and Cement. FMCG was the sole laggard. Broader markets joined the rally, with Nifty Midcap gaining 0.94 per cent and Nifty Smallcap advancing 1.37 per cent.

Market volatility eased sharply. India VIX fell 6.28 per cent to close at 16.70, reflecting a meaningful reduction in hedging activity and improved risk appetite. The rupee strengthened around 0.45 per cent to 95.22 against the dollar, aided by lower crude import pressures and improved global sentiment. On the commodities front, MCX Gold edged up 0.36 per cent to around ₹1,59,250, with rupee appreciation limiting the domestic upside despite a 1.24 per cent rally in COMEX gold to around $4,565.

“Sustainability of this momentum will depend on a credible de-escalation in geopolitical tensions and continued stability in crude oil prices,” said Vinod Nair, Head of Research, Geojit Investments.

Caution, however, persists. Trump also noted that the Hormuz blockade would continue until a final agreement is formally signed, keeping investors watchful. Key sticking points around nuclear enrichment remain unresolved. Scheduled monthly derivatives expiries over the next two sessions and an ongoing earnings season are expected to keep stock-specific volatility elevated. Technically, the Nifty’s next resistance band sits at 24,150–24,200, with a sustained move above potentially opening the door toward the 24,400–24,600 zone. The 23,800–23,875 band will serve as key support on any dip.

Published on May 25, 2026