Sensex surged 1,074 points as Nifty reclaimed the 24,000 mark.
Falling crude prices and US-Iran deal hopes boosted market sentiment.
Defence and banking stocks rallied, with select defence shares jumping 16%.
Indian benchmark indices staged a strong rally on Monday as easing concerns around the Strait of Hormuz and a sharp decline in crude oil prices boosted investor sentiment. Largecaps led the recovery, helping benchmark indices register their strongest single-day gains in several weeks, while hopes of progress in US-Iran negotiations improved risk appetite globally.
The NSE Nifty50 rose 312.40 points or 1.32% to close at 24,031.70, reclaiming the psychologically important 24,000 level for the first time in 11 trading sessions. The BSE Sensex advanced 1,073.61 points or 1.42% to settle at 76,488.96, marking its biggest one-day gain in nearly six weeks.
1 May 2026
Get the latest issue of Outlook Business
The rally was broad-based, although benchmark indices outperformed broader markets. Banking stocks emerged as key contributors, while easing crude prices and a recovery in the rupee supported sentiment through the session.
Banking Stocks Lead Market Recovery
Sectorally, Bank and PSU Bank indices led gains and rose over 2% each. Canara Bank and Union Bank featured among top gainers as financial stocks witnessed renewed buying interest.
IT stocks also snapped a three-session losing streak, while metal and auto shares extended gains. FMCG, however, remained under pressure and ended lower for the sixth straight session, emerging as the only sectoral loser.
Broader markets underperformed the benchmarks despite positive sentiment. The rally was largely concentrated in largecaps as investors preferred relatively safer bets amid ongoing geopolitical uncertainty.
Vinod Nair, Head of Research at Geojit Investments Limited, said largecaps benefited from more attractive valuations.
"Markets witnessed strong positive momentum, driven by a correction in crude oil prices amid rising expectations of a potential US-Iran deal. The rally was led by large caps, supported by relatively attractive valuations versus long-term averages," he said.
Oil Fall Boosts Risk Appetite
Crude oil prices remained under pressure after witnessing sharp declines last week. Brent crude fell around 5% to $96.04 a barrel, while WTI crude slipped roughly 5% to $91.65.
The decline followed comments by US President Donald Trump that planned US military action against Iran had been paused to allow further discussions.
Market participants viewed the developments as a sign of potential easing in tensions surrounding the Strait of Hormuz, one of the world's most critical energy shipping routes.
However, uncertainty remains elevated as Trump later indicated that restrictions around Hormuz would continue until a final agreement is formally reached.
Defence Stocks Rally
Defence shares emerged among the biggest winners during Monday's trade after Defence Minister Rajnath Singh said the government intends to significantly increase private sector participation in India's defence manufacturing ecosystem.
The minister said private companies currently account for 25-30% of defence production and the government aims to increase this contribution to nearly 50%.
Apollo Micro Systems surged 15.63% and emerged as the top performer in the defence space. Astra Microwave Products rose 5.53%, while Paras Defence and Space Technologies gained 5.28%.
DCX Systems advanced 4.3%, while Data Patterns climbed 3.36%. The Nifty India Defence index rose 1.38%.
Rupee Gains For Third Session
The rupee strengthened for a third consecutive session and settled at 95.23 against the US dollar, supported by RBI commentary and softer crude oil prices.
Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, said improving sentiment surrounding US-Iran negotiations supported emerging market currencies.
"The rupee recovery is also being aided by softer crude prices and improving sentiment in global markets, though movement ahead will continue to depend heavily on final developments in US-Iran negotiations and energy market stability," he said.
Market participants will now closely monitor further geopolitical developments and crude oil trends for signs of sustainability in the current rally.
