Key facts
- Indian equity indices surged over 2% on Friday, the largest single-day gain in over two months.
- The rally was driven by a sharp decline in oil prices amid optimism over a potential US-Iran peace deal.
- Brent crude futures fell below $90 a barrel for the first time in three months.
- The NSE Nifty closed up 2% at 23,622.9, and the BSE Sensex rose 2.3% to 75,527.95.
- India's volatility index (VIX) fell 5.7% to 14.72, indicating eased risk perception.
Indian equity indices surged over 2% on Friday, marking their largest single-day gains in more than two months, as a sharp decline in oil prices eased investor sentiment. Brent crude futures fell below $90 a barrel for the first time in three months, triggering a broad rally across Asian markets.
The NSE Nifty rose 461 points, or 2%, to close at 23,622.9, while the BSE Sensex gained 1,695 points, or 2.3%, ending at 75,527.95. Both indices reversed two weeks of losses, posting their highest single-day gains since April 8.
Optimism surrounding a potential peace deal between the U.S. and Iran, which could ease supply disruptions, drove the market rally. Donald Trump's comments on Thursday raised hopes for a resolution to the West Asia conflict and the reopening of the Strait of Hormuz. However, Iran maintained that no final decision had been taken, tempering immediate optimism.
The decline in oil prices is expected to benefit sectors such as oil marketing, aviation, paint, and auto stocks. India's volatility index (VIX), a measure of traders' risk perception, fell 5.7% to 14.72, indicating improved sentiment. The VIX has dropped 13.3% in the past five sessions.
Foreign portfolio investors were net sellers of shares worth Rs 1,082 crore, while domestic institutions were net buyers to the tune of Rs 5,341 crore. Broader market indices, including the Nifty Midcap 150 and Nifty Small-cap 250, also outperformed the benchmark indices.
Technically, the Nifty 50 has closed decisively above its 20-day moving average of 23,500, signaling improved market sentiment. Analysts suggest the Nifty could advance towards 24,300 in the coming weeks, with key support seen at 23,100. If the Strait of Hormuz reopens, oil prices could fall below $80 a barrel.