Markets Surge Nearly 2%; Bank Nifty Jumps 3% As Crude Slips, Rupee Strengthens

Indian equity benchmarks ended sharply higher on Friday, with the Sensex surging nearly 1,700 points and the Nifty reclaiming the 23,600 mark, as easing geopolitical tensions, softer crude oil prices and strength in banking stocks lifted investor sentiment.

The BSE Sensex rallied 1,695.40 points, or 2.30%, to close at 75,527.95, while the NSE Nifty50 advanced 461.30 points, or 1.99%, to settle at 23,622.90.

Market breadth remained firmly positive, with 3,110 stocks advancing against 969 declines on the NSE.

Among the Nifty constituents, Shriram Finance, Larsen & Toubro, InterGlobe Aviation, Bajaj Finance and Titan Company emerged as the top gainers. Nestle India, ONGC, Tech Mahindra, Tata Consumer Products and SBI Life Insurance were among the laggards.

Banks Drive Market Higher

Banking stocks were the biggest contributors to the rally, with the Nifty Bank index climbing 3% to 56,815 and outperforming the benchmark Nifty.

All 14 Bank Nifty constituents ended in the green. Heavyweights including HDFC Bank, ICICI Bank, Axis Bank and State Bank of India led the gains, supported by improving risk appetite after the decline in crude oil prices and easing concerns around the West Asia conflict.

The Nifty Private Bank index rose 2.8%, while the Nifty PSU Bank index gained 2.7%.

The rally was broad-based, with all sectoral indices ending in positive territory. Consumer durables, realty, telecom, banking, auto, media, oil & gas and metal indices gained between 1% and 2%.

The broader market outperformed benchmark indices. The Nifty Midcap 100 and Nifty Smallcap 100 indices advanced more than 2% each.

The rupee also strengthened significantly, ending 64 paise higher at 95.11 against the US dollar compared with the previous close of 95.75.

Technical Indicators Improve

According to Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, the Nifty staged a strong recovery after witnessing profit booking in the first half of the session.

"Nifty opened with a gap-up on the back of renewed optimism surrounding a potential US-Iran deal. However, the index failed to sustain at higher levels as profit booking emerged. Strong buying interest in the second half helped Nifty close at 23,631, up 2.03%," he said.

Shah noted that the Nifty formed a sizeable bullish candle on the daily chart and reclaimed its 20-day exponential moving average (EMA) for the first time since May 27, signalling an improvement in momentum.

He added that the RSI has moved sharply higher, indicating a revival in bullish sentiment. The broader market also showed strength, with both the Midcap and Smallcap indices reclaiming their respective 20-day EMAs.

Market breadth improved significantly, with 443 stocks out of the Nifty 500 universe ending in the green, reflecting broad-based participation rather than a rally restricted to a few heavyweight stocks.

Focus Shifts To Fed Outlook

Vinod Nair, Head of Research at Geojit Investments, said domestic equities continue to find support from strong local liquidity despite global macroeconomic challenges.

"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 moderation in growth momentum," he said.

Nair noted that investors are now closely watching the upcoming US Federal Reserve meeting and any changes in policy direction under the new Fed leadership.

According to him, Indian markets appear to be in the final stages of a prolonged consolidation phase, with strong domestic flows helping absorb foreign outflows.

He added that any moderation in FII selling or greater clarity on the Fed's policy outlook could trigger a broader breakout in Indian equities, supported by the large pool of domestic capital waiting on the sidelines.