Indian stock markets demonstrated remarkable resilience this week, with Sensex adding 1.73% during the week and closing at 75,527.95, up 1,695.40 points or 2.30%, while Nifty gained 1.10% for the week and 1.99% on the last trading day to reach 23,622.90. According to Zee News, the Indian equity benchmarks posted notable gains after two weeks of consecutive losses, driven by investor optimism about potential US-Iran peace agreement and decline in Brent crude prices. The rally was triggered by breakthrough reports of an imminent US-Iran peace deal, with Brent crude prices falling sharply after Trump reportedly cancelled plans for additional military strikes against Iran. The surge helped the equity benchmarks reclaim the crucial 23,600 level and end comfortably above it, reflecting renewed confidence among investors after recent bouts of volatility. All major sectoral indices ended in positive territory, with realty, financial services, PSU banks, private banks and consumer durable stocks leading the gains, rising between 2 and 4%. The rally was broad-based with market breadth remaining strongly positive, with positive global market cues and sustained domestic institutional buying further strengthening investor sentiment.
Brent crude, which had traded near $93 per barrel in overnight dealings, fell sharply after Trump reportedly cancelled plans for additional military strikes against Iran. According to The Economic Times, Brent crude fell over 5% on Friday, falling below $90 a barrel for first time in three months, as reports indicating that negotiations between the US and Iran were nearing completion reduced fears of prolonged disruptions to global crude oil supplies. August Brent crude oil futures were trading at $88.3 per barrel on Friday evening, down 2.4% over the previous day. The market capitalisation of BSE-listed companies increased by ₹9.7 lakh crore to ₹462 lakh crore, taking the total market value to around ₹462 lakh crore. Foreign portfolio investors (FPIs) sold shares worth ₹1,082 crore on Friday, while domestic institutional investors were net buyers of ₹5,341 crore, with insurance companies and mutual funds pumping ₹5,341 crore into the market. Siddhartha Khemka of Motilal Oswal Financial Services noted that "The sharp market recovery suggests that investors are beginning to price in a more favourable geopolitical outcome. While a formal agreement remains pending, the moderation in crude oil prices and the appreciation of the rupee against the dollar have improved the near-term outlook for domestic equities."
The Indian rupee recorded a significant recovery, appreciating by 65 paise to close at 95.11 against the US dollar, benefiting from the sharp fall in global crude prices and weakness in the American currency. According to The Times of India, the Indian currency opened more than 40 paise firmer from Thursday's close at 95.76/$, briefly traded above 95 and finally settled at 95.11, up 65 paise for the day. The strengthening rupee boosted investor confidence by easing concerns over imported inflation and foreign capital outflows. The rupee's appreciation was particularly beneficial for India, one of the world's largest oil-importing nations, as lower oil prices are expected to reduce inflationary pressures and improve the country's fiscal outlook. This development provided additional support to the broader market rally and helped sustain positive sentiment throughout the trading session.
All sectoral indices on the BSE ended in the green, while on the NSE, all sectoral indices except the Nifty IT index closed higher. According to The Economic Times, realty, financial services, PSU banks, private banks and consumer durable stocks led the gains, rising between 2 and 4%. Information technology stocks, while ending higher, underperformed the broader market and remained the session's relative laggards. Bajaj Finance, L&T, Reliance Industries, ICICI Bank, and Bajaj Finance together added another 610 points, contributing 36% to the rally. BSE MidCap and BSE SmallCap indices advanced 2.39% and 2.82% respectively, outperforming the benchmarks. On Friday, the broader market indices outperformed the benchmark, as the Nifty Midcap 150 gained 2.4% and the Nifty Small-cap 250 rose 2.6%. Out of the total 4,422 stocks traded on the BSE, 3,155 advanced and 1,119 declined at close. Independent market expert Ambareesh Baliga noted that "Banking sectors have done well based on the expectations of an end to the conflict," adding that "the end to the conflict may lead to a reversal in oil prices, lowering of inflation and appreciation of rupee with the hopes of FIIs coming back."
Technically, the Nifty's undertone has improved and the index is expected to remain constructive as long as it sustains above the 23,600–23,700 zone, according to market analysts. As reported by SBI Securities, immediate resistance for the Nifty is placed in the 23,770-23,800 zone, with a sustained move above this range potentially extending the pullback towards 23,950 and subsequently 24,100. On the downside, immediate support is placed at 23,470-23,450. According to The Economic Times, Dharmesh Shah, head of technical research at ICICI Securities, said the Nifty 50 has decisively closed above its 20-day moving average of 23,500 after facing resistance at this level multiple times, signalling improved market sentiment. Technically, Nifty may advance towards 24,300 in the coming weeks, while key support is seen at 23,100. Shrikant Chouhan of Kotak Securities noted that "If at all the war sees an end, then a fall in crude oil prices, supply chain restoration would give a good breathing space to Indian equities." Sudeep Shah of SBI Securities noted that Friday's rally carries added significance from a technical standpoint, as the Nifty closed above its 20-day EMA for the first time since May 2026, indicating an improvement in short-term momentum. The daily RSI has rebounded sharply from lower levels and is now trading above the 50 mark while also moving above its 9-day average, with the Daily Stochastic generating a bullish crossover. With multiple indicators turning favourable simultaneously, the obvious question is how much room the rally still has, with the recent breakout above key short-term resistance levels suggesting the index could extend its upmove towards 23,800, followed by the psychological 24,000 mark.
