Indian equity markets staged a strong recovery on Friday, with the BSE Sensex surging 500+ points and the NSE Nifty rising 1.09% to settle at 24,334, defying weak global cues and escalating geopolitical tensions. According to The Hindu BusinessLine, the benchmarks closed sharply higher as buying in banking, IT, and financial heavyweights drove a broad-based rally. The Nifty ended the week 0.53% higher, having found consistent support near the 24,000 level, its 20-day moving average. This marked a significant reversal from earlier sessions when markets had declined on US-Iran tensions and crude oil price concerns. As per Religare Broking's Ajit Mishra, markets staged a strong advance despite weak global cues, with the Nifty closing near the day's high.
Crude oil prices continued their upward trajectory, with Brent crude climbing above $85 a barrel and on course for a weekly gain of over 10%, driven by escalating conflict between the United States and Iran. As reported by The Hindu BusinessLine, tanker traffic through the Strait of Hormuz is at two-month lows after six consecutive nights of US strikes on Iranian military infrastructure. Tehran has reportedly asked Yemen's Houthi faction to prepare to shut the Bab el-Mandeb strait if Iranian infrastructure faces further strikes, raising the spectre of two simultaneous chokepoint closures. Kotak Securities' Kaynat Chainwala noted that with the ceasefire effectively in name only and escalation risk building on both fronts, the geopolitical risk premium embedded in prices looks unlikely to unwind soon. The development continues to weigh on sectors sensitive to fuel costs and currency movements.
Banking and IT sectors emerged as the standout performers, with IT surging 4.2% for the week, lifted by better-than-expected results from Tech Mahindra. According to The Hindu BusinessLine, private banks also gained on expectations that an RBI special overseas deposit scheme could pull in around $30 billion from NRIs, bolstering forex reserves. However, pharma, metals, and realty were the week's laggards, while broader markets underperformed with the Nifty Midcap 100 declining 0.41% and Smallcap 100 falling 0.21% due to selective profit-booking outside index heavyweights. The rupee traded largely flat at 96.26 against the dollar, gaining just around 4 paise on the day, with elevated crude prices and cautious foreign fund flows continuing to weigh on the domestic currency.
Global markets remained volatile with gold clawing back above $4,000 per ounce but remaining down 3% for the week, while silver is near its weakest since November 2025, off more than 10% for the week. As reported by The Hindu BusinessLine, Fed commentary remained hawkish, with September rate hike odds on CME FedWatch rising to 53%. The India VIX reflected increased uncertainty and risk reduction by traders, with analysts noting that the combination of elevated crude prices, overseas fund outflows and geopolitical tensions could expose the indices to further declines if key support levels are breached. Looking ahead, investor attention will be firmly on earnings from Reliance Industries, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank over the weekend, which are expected to set the tone for the Financials sector and define broader market direction.
Despite the recent rally, analysts remain cautious about sustained momentum, with Siddhartha Khemka of Motilal Oswal expecting a gradual uptrend driven by the earnings season, though crude at elevated levels and rupee weakness remain key risks to watch. According to The Hindu BusinessLine, analysts expect volatility to remain elevated if geopolitical tensions intensify or oil prices stay above $100 a barrel, with investors now closely tracking developments in the Middle East, movements in crude oil prices, US trade policy and domestic quarterly earnings. The technical range for the rupee is pegged at 96.00–96.55, while the combination of geopolitical uncertainties and domestic economic factors continues to influence market sentiment and currency movements.
