The Indian stock market witnessed strong across-the-board buying on Monday, May 25, with benchmark indices rising more than 1 percent each amid optimism over a possible US-Iran peace deal, easing crude oil prices and a stronger rupee.
The Sensex surged 1,074 points, or 1.42 percent, to close at 76,488.96, while the Nifty 50 climbed 1.32 percent to settle at 24,031.70. Investors gained nearly ₹6 lakh-crore in a single session as the market capitalisation of BSE-listed firms rose to around ₹469 lakh-crore from ₹463 lakh-crore in the previous session.
The broader market also remained firm. The BSE Midcap index gained 0.80 percent, while the Smallcap index rose 1.22 percent.
Among Sensex stocks, Bajaj Finance, HDFC Bank, Eternal and Larsen & Toubro emerged as the top gainers. Infosys, TCS and Hindustan Unilever ended lower.
Sector-wise, banking and financial stocks led the rally.
Nifty Bank jumped more than 2 percent
Nifty Financial Services gained over 2 percent
Nifty Private Bank rose over 2 percent
Nifty PSU Bank surged 3 percent
Auto, realty, oil and gas, and consumer durable stocks also posted healthy gains. FMCG was the only sectoral index to close in the red.
Investor sentiment improved after reports suggested progress towards a potential US-Iran peace agreement.
US President Donald Trump reportedly said significant progress had been made towards a deal with Iran and indicated that the Strait of Hormuz could reopen. The waterway handles nearly one-fifth of global oil exports.
Although Trump later clarified that the US would not rush into any agreement, markets reacted positively to hopes that tensions in the Middle East may ease.
Brent crude prices dropped more than 5 percent during Monday’s trade, slipping below $98 a barrel and boosting market sentiment.
Lower crude oil prices are positive for India as they help ease inflationary pressures, improve the fiscal position and support expectations of monetary easing.
VK Vijayakumar of Geojit Investments said the market was reacting positively to the sharp fall in crude prices. “If this expected deal holds and crude drifts down, that can turn out to be a turning point for the market,” he said.
The Indian rupee appreciated 35 paise to close at 95.25 against the US dollar, supported by easing geopolitical concerns and improving sentiment.
Recent comments by RBI Governor Sanjay Malhotra also boosted confidence after he said the central bank would do “whatever is required” to ensure orderly price discovery in the forex market.
Market experts believe a stable rupee could help attract foreign portfolio investors (FPIs), who have remained net sellers for an extended period.
Global cues also remained supportive. The dollar index slipped 0.30 percent, while the US 10-year bond yield declined nearly 2 percent to 4.48 percent. Lower US yields generally improve appetite for emerging market equities such as India.
Despite Monday’s sharp gains, analysts remain cautious about the sustainability of the rally.
Vijayakumar said a sustained medium-term uptrend would require:
Crude oil prices stabilising below $90 a barrel
Further strengthening in the rupee
Lower global bond yields
Improvement in global liquidity conditions
He added that better-than-expected March quarter earnings may support the market after a temporary slowdown in the first quarter of FY27.
Ajit Mishra of Religare Broking said the current rally was largely sentiment-driven and depended heavily on lower crude prices and easing geopolitical tensions.
However, he warned that concerns remain over:
Expensive market valuations
Weak earnings growth
Slowing consumption demand
Persistent FPI outflows
According to Mishra, a durable market rally would require stronger corporate earnings growth, improvement in domestic demand and stability in global markets.
(By arrangement with livemint.com)