Markets experienced a significant recovery on Monday, fueled by heightened global risk appetite following remarks from US President Donald Trump, who indicated that a peace deal with Iran was “largely negotiated.” The expectation of reduced tensions in West Asia led to a sharp decline in energy prices, prompting a broad-based buying surge on Dalal Street.
Ajit Mishra, Senior Vice President of Research at Religare Broking, noted, “Sentiment was primarily driven by optimism surrounding a potential US-Iran peace agreement, triggering a sharp correction in crude oil prices… the outperformance of private banking majors, supportive earnings announcements, and the rupee’s further strengthening against the US dollar aided the recovery.”
The Nifty 50 index closed at 24,031.70, an increase of 312.40 points or 1.32 percent, marking its first sustained close above the psychologically significant 24,000 level in recent sessions after reaching an intraday high of 24,054.45. The BSE Sensex finished at 76,488.96, gaining 1,073.61 points or 1.42 percent. The Bank Nifty outperformed, surging by 1,238.30 points or 2.29 percent to close at 55,293.65, surpassing the 55,000 milestone intraday.
The principal catalyst for the market rally was the steep decline in crude prices. US crude fell over 5.5 percent, dropping below the $92 mark, while domestic crude futures dipped under ₹8,800 as markets adjusted to the potential reopening of the Strait of Hormuz — a crucial energy corridor that accounts for nearly one-fifth of global oil and LNG shipments. Brent crude also sank below $96 per barrel.
Banking and financial stocks spearheaded the rally, with the PSU Bank index climbing 3.10 percent. Major private banks, including HDFC Bank, ICICI Bank, and Axis Bank, saw robust institutional buying. Other sectors that posted gains included Auto, Realty, Chemicals, Oil & Gas, Consumer Durables, and Cement, while FMCG lagged behind. Broader market indices also showed positive trends, with Nifty Midcap rising by 0.94 percent and Nifty Smallcap increasing by 1.37 percent.
Market volatility diminished sharply, reflected by a 6.28 percent drop in the India VIX, which closed at 16.70. This decline suggests a meaningful reduction in hedging activity and an improved risk appetite among investors. The rupee strengthened approximately 0.45 percent to 95.22 against the dollar, supported by lower crude import pressures and favorable global sentiment. On the commodities front, MCX Gold rose by 0.36 percent, reaching around ₹1,59,250, although a 1.24 percent increase in COMEX gold, priced around $4,565, limited the domestic upside due to rupee appreciation.
Vinod Nair, Head of Research at Geojit Investments, remarked, “Sustainability of this momentum will depend on a credible de-escalation in geopolitical tensions and continued stability in crude oil prices.”
Despite the positive developments, caution remains. Trump indicated that the Strait of Hormuz blockade would persist until a final agreement is officially signed, keeping investors attentive. Unresolved issues related to nuclear enrichment also present key sticking points. Upcoming scheduled monthly derivatives expiries and an active earnings season are expected to maintain stock-specific volatility. From a technical standpoint, the Nifty’s next resistance band is positioned at 24,150–24,200, and sustained movement above this range could open pathways toward the 24,400–24,600 zone, while the 23,800–23,875 region is expected to serve as critical support in the event of a dip.
Published on May 25, 2026.
