Indian stock markets witnessed a powerful and jubilant rally as global investor sentiment turned sharply positive following the announcement of a surprise ceasefire between Israel and Iran. The diplomatic breakthrough, declared by U.S. President Donald Trump as a “complete and total ceasefire,” de-escalated immediate tensions in one of the world’s most volatile conflict zones, triggering a wave of relief across global financial markets.
On Monday, the Sensex surged nearly 1,000 points while the Nifty 50 climbed past the key psychological barrier of 25,250. The rally continued into Tuesday, with the Nifty hitting around 25,226 and the Sensex nearing 82,744, marking their highest levels in nearly nine months. GIFT Nifty futures also pointed to further gains, trading around 25,297, indicating continued investor optimism.
The ceasefire announcement brought much-needed relief to markets that had been gripped by fears of an extended regional conflict and disruptions to energy supplies. As tensions cooled, global oil prices fell sharply. Brent crude dropped nearly 4 percent to around \$69.30 per barrel after an earlier 7 percent plunge. This significant decline offered a double benefit for India—reducing the country’s import bill and easing inflationary pressures.
The Indian Rupee responded positively, appreciating by nearly 65 paise to settle around ₹86.1 per U.S. dollar. The rally in equities and currency was further aided by a weakening U.S. dollar globally and increased speculation of interest rate cuts by the Federal Reserve, which boosted appetite for emerging market assets.
The market rally was broad-based across sectors. Banking stocks led the charge, driven by expectations of better credit growth supported by falling oil prices. Public Sector Undertakings (PSUs), auto, and IT stocks also posted strong gains in the range of 1 to 2 percent. Shares of Indian Oil Corporation, Bharat Petroleum, and InterGlobe Aviation rose sharply, while Adani Ports gained around 4 percent due to its operational interest in Israel’s Haifa port.
On the other hand, upstream oil companies such as ONGC and Oil India saw declines of about 2 to 4 percent due to lower crude prices, which impact their profitability. However, this was more than offset by strong gains in consumer-focused and import-dependent sectors.
Mid-cap and small-cap indices joined the rally, highlighting a renewed risk appetite among investors. The India VIX, a key volatility index, dropped by nearly 5 percent, signaling a retreat of fear from the market. Foreign institutional investors also resumed buying Indian equities, adding further strength to the uptrend.
Asian markets echoed the positive sentiment. Benchmarks in Tokyo, Hong Kong, and Seoul all closed in the green. MSCI’s Asia Pacific ex-Japan index rose by 2 percent, while U.S. futures markets, including the S\&P 500, Nasdaq, and Dow Jones, also pointed to strong openings.
Bond markets and commodities followed suit. Indian government bond yields edged lower on improved sentiment, while gold prices fell to a two-week low around \$3,338 per ounce as safe-haven demand waned. U.S. Treasury yields slipped, reflecting market expectations of policy easing by the Federal Reserve.
Market experts noted that while this appears to be a classic relief rally, the sustainability of the current momentum depends on continued diplomatic progress and stability in the Middle East. Any reversal or renewed hostilities could lead to fresh volatility.
As a senior analyst at a leading brokerage firm remarked, “Markets were sitting on a pile of global nervousness. The moment geopolitical anxiety started to cool, the rally took off like a dam burst. This is a classic relief rally, supported by oil correction and global cues.”
With the immediate geopolitical cloud lifting, investor focus will now shift to upcoming domestic economic data, corporate earnings, and the durability of the ceasefire agreement in the Middle East. While the current trend is encouraging, market participants remain watchful for any signs of reversal.