Domestic equity markets rallied sharply alongside global peers on Wednesday, buoyed by improved sentiment after the US and Iran agreed to a two-week ceasefire. A sharp drop in global crude oil prices, dovish commentary from the Reserve Bank of India and short-covering by traders aided the upmove.
The Sensex surged 2,946 points, or 3.95 per cent, to close at 77,563 — its biggest single-day gain since February 1, 2021. The Nifty rose 874 points, or 3.8 per cent, to end at 23,997, marking its strongest advance since May 12, 2025.
The total market capitalisation of BSE-listed firms jumped by Rs 16.3 trillion to Rs 445.5 trillion. Ahead of the conflict, India’s market capitalisation stood at Rs 464 trillion.
The rally came after Iran agreed to conditions linked to the reopening of the Strait of Hormuz — a critical chokepoint that carries nearly a fifth of global oil supplies. The earlier blockade had rattled oil markets and sparked fears of a global energy shock.
Although Brent crude prices have eased more than 15 per cent following the ceasefire announcement to trade close to $90 a barrel, they remain well above the pre-conflict level of around $73 per barrel.
Foreign portfolio investors (FPIs) were net sellers to the tune of Rs 2,812 crore, while domestic institutional investors (DIIs) provided support with net inflows of Rs 4,168 crore. FPI outflows were lower than their average selling of about Rs 7,000 crore per session since the conflict began, whereas DII inflows have averaged nearly Rs 7,500 crore per session over the same period.
The India VIX index cooled 20 per cent to 19.7. Broader market indices — the Nifty Midcap 100 and the Nifty Smallcap 100 — rose over 4 per cent each. All sectoral indices ended with gains, with financials, auto and realty leading the charge with gains of over 6 per cent each.
Wednesday’s sharp rebound comes after an 8 per cent correction since the conflict began.
Despite the ceasefire announcement, tensions remain elevated. The UAE said it responded to a missile threat, while Kuwait reported intense attacks from Iran, underscoring the fragility of the truce.
Analysts said the sustainability of the rally will hinge on developments in energy markets and supply chains.
“If oil prices continue to fall and logistics normalise, markets can begin to unwind stagflation risks,” said Stephen Dover of the Franklin Templeton Institute. However, he cautioned that damage to Gulf energy infrastructure could delay a full recovery in supply.
“Supply normalisation won’t be immediate. Oil, natural gas and fertiliser prices are unlikely to revert quickly to pre-war levels. The key variable is not the ceasefire headline, but whether shipping flows, insurance costs, and actual energy transit normalise. Confidence in safe passage remains uncertain,” Dover added.
Market participants cautioned that volatility may persist.
“The volatility will continue for some more time. Elevated oil prices are already having a cascading impact on inflation, interest rates, and corporate earnings. Earnings growth expectations for FY27 may moderate from 14–15 per cent to 10–12 per cent. If oil sustains around $100 this financial year, growth could slip to single digits,” said Dhiraj Relli, managing director and chief executive officer of HDFC Securities.
Market breadth was strong, with 3,832 stocks advancing and 575 declining. All but three Sensex constituents ended higher. HDFC Bank, up 5.7 per cent, was the top contributor to gains, followed by ICICI Bank, which rose 5.1 per cent.
