Indian stock markets traded sharply higher on Monday, with the Sensex and Nifty rallying over 1% each as rising hopes of a US-Iran peace deal, falling oil prices, and other factors boosted market sentiment.
The Sensex gained around 1,074 points to close at 76,489, while the Nifty 50 rose 312 points to end the session at 24,032. Notably, these marked the highest closing levels for the benchmark indices since May 8. Today’s sharp gains added more than Rs 6 lakh crore to the total market capitalisation of all companies listed on the BSE, taking it to around Rs 469 lakh crore.
Bajaj Finance, HDFC Bank, Zomato-parent Eternal, L&T, Bajaj Finserv, State Bank of India (SBI), Kotak Mahindra Bank, ICICI Bank and Mahindra & Mahindra (M&M) shares were the top gainers on Sensex, jumping 2-3%. Bucking the trend, Infosys, TCS, Hindustan Unilever and Sun Pharma shares closed in the red with marginal losses.
India VIX, which measures volatility in the market, tumbled around 7% to 16.70. The optimism was broad-based, with Nifty Midcap 100 and Nifty Smallcap 100 indices gaining around 1%. Sectorally, Nifty Private Bank and Nifty PSU Bank indices rallied over 2% and 3% respectively to lead gains, while Nifty FMCG slipped into the red with marginal losses. Around 2,271 stocks advanced on NSE, while 1,046 declined and 102 remained unchanged.
"We are starting the week on a positive note. Crude has dipped by $5 to below $100 on expectations that the US and Iran are close to a deal. The market will wait and watch for clarity and certainty since many similar expectations have been belied since the start of the war. If this expected deal holds and crude drifts down, that can turn out to be a turning point for the market,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Here are the factors boosting market sentiment today:
1) Iran-US peace deal hopes rise
US President Donald Trump has said that Washington and Iran had "largely negotiated" a memorandum of understanding on a peace deal that would effectively reopen the Strait of Hormuz. He later said he had told his representatives not to rush into any deal.
Meanwhile, the US and Iran are inching closer towards a peace deal as negotiators have agreed to the broad principles of the much-awaited agreement, CBS News reported on Sunday, citing a senior Trump administration official. The latest developments sparked hopes for a sooner conclusion to the peace deal.
2) Oil prices decline below $100/ barrel
As a result of the renewed hopes for a sooner conclusion to the Iran-US peace deal, oil prices tumbled. Brent crude futures crashed nearly 6% to trade at around $98 per barrel, while WTI Crude futures also declined nearly 6% to $91 per barrel on Monday afternoon.
This comes as investors increasingly hope for the resumption of normal traffic through the Strait of Hormuz, a narrow 33-kilometre waterway connecting the Persian Gulf with the Gulf of Oman that handles over 20% of the world’s daily oil and gas shipments.
3) Global markets rally
As a result of the renewed optimism, global markets rallied. Japan’s Nikkei soared around 3% to cross the 65,000 level for the first time ever on Monday. China’s Shanghai Composite gained nearly 1% while the Taiwan Weighted rallied over 3%.
European markets had closed in the green on Friday, with Germany’s DAX gaining over 1%. Wall Street had also ended the session in the deep green last week, with Dow Jones futures rising around 1% on Monday, indicating a positive start for the American stock market later today.
4) Rupee rallies
Indian rupee rose 35 paise to close at 95.25 against the US dollar on Monday, as compared to the previous close of 95.69. This comes after the Indian currency dropped to fresh lifetime lows last week.
“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,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.
5) Bond yields decline
Bond yields cooled down, falling below the multi-year highs that they hit last week. The benchmark 10-year US Treasury yield declined to 4.558% while that on 30-year Treasury notes declined to 5.064%.
Falling bond yields typically make bonds less attractive to investors, which in turn can lead to some uptrend in equity markets.
FIIs remains net sellers
Despite the renewed optimism, some caution is warranted. Foreign investors remained net sellers of Indian equities for the fourth consecutive session on Thursday, selling shares worth Rs 4,440 crore on Dalal Street, according to provisional data on NSE. Foreign investors have mostly remained bearish on Indian markets this month so far, remaining net sellers of Indian equities in 11 out of 15 sessions so far in May.
“FPI selling for May up to the 23rd stood at Rs 30,374 crore, taking the total FPI selling in 2026, so far, to Rs 2,22,343 crores. This is higher than the total sales figure of Rs 1,66,283 crores for 2025,” said V K Vijayakumar, Chief Investment Strategist, Geojit Investments. “The important question is: when will the FIIs turn buyers in India. It is important to understand the principal reasons behind this sustained selling,” he added.
Poor earnings growth in India, much better earnings growth and prospects in other markets, high bond yields, particularly in the US, and persistent rupee depreciation and fears of further depreciation were cited as the reasons for sustained FII outflows. However, he added that stabilisation of the rupee and improvement in the prospects of earnings growth can bring FIIs back to India. “Even while selling largecaps, they have been buying in SMIDs where growth and earnings prospects are good. This means earnings are the primary factor,” he further said.
What lies ahead?
Successive days of Nifty 50 closing not far from 23,700 in the last seven days suggest that the odds of a range breakout are high, according to Anand James, Chief Market Strategist, Geojit Investments. “Two consecutive days of close above 10-day SMA encourage us to step into the new week with positivity despite seeing rejection trades through last week on every attempt to push higher. Prospects of moving into the 23,900-24,450 band depend on the ability to float above 23,600. Inability to do so may not trigger a vertical collapse, but major support is seen far, at 22,800,” he said.
The broader market structure continues to remain constructive and indicates a positive undertone, said Nilesh Jain, VP- Head of Technical and Derivative research, Centrum Finverse. “Going into the coming week, volatility is expected to remain elevated owing to the monthly F&O expiry. We expect the Nifty to trade within a broader range of 23,500–24,000 with a positive bias,” he added.
(With inputs from agencies)
(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. These do not represent the views of The Economic Times)
