Domestic equities rallied on Friday, logging their best weekly gain in more than five years as the US–Iran ceasefire –although tentative– helped improved investor sentiment and eased concerns over oil price disruptions.
Benchmark Sensex and Nifty indices snapped their six-week losing streak. The Sensex on Friday closed at 77,550, up 919 points or 1.2 per cent, while the Nifty ended at 24,051, gaining 276 points or 1.2 per cent. For the week, the Sensex advanced 5.8 per cent and the Nifty 5.9 per cent — their best weekly performance since February 5, 2021.
The total market capitalisation of BSE-listed firms rose by Rs 6.4 trillion on Friday to Rs 451.2 trillion ($4.87 trillion), taking the weekly increase to Rs 28.9 trillion.
Investor confidence strengthened after the temporary ceasefire announced earlier in the week triggered a sharp decline in oil prices. Brent crude fell about 12 per cent during the week — its steepest drop since the week ended June 27, 2025 — and was trading at $93.67 on Friday. The decline offered relief to investors worried about the inflationary impact of elevated energy prices. Higher crude prices typically weigh on India’s growth and corporate earnings, given its heavy reliance on oil imports.
However, signs of strain persisted. The Strait of Hormuz remained shut on Friday, while Israel exchanged fire with Hezbollah in Lebanon. The United States and Iran also accused each other of violating the ceasefire. Sustained improvement in global risk sentiment is unlikely until hostilities fully cease and the Strait of Hormuz reopens.
Investors will closely monitor the outcome of peace talks in Islamabad between the US and Iran, alongside the progress of the domestic earnings season, which began this week. Management commentary on the impact of the conflict on corporate profitability will be in focus.
“If oil prices keep falling, the relief rally in markets could continue because equities are almost one-to-one correlated with oil prices right now. However, given the ongoing hostilities in the Middle East, it is unlikely that oil prices will keep declining significantly, which means the relief rally could prove short-lived,” said Saurabh Mukherjea, Founder and Chief Investment Officer, Marcellus Investment Managers.
Market breadth remained strong, with 3,325 stocks advancing and 986 declining. Foreign portfolio investors (FPIs) were net buyers worth Rs 672 crore on Friday, while domestic institutional investors bought equities worth Rs 410 crore. While the intensity of FPI selling has reduced over the past three sessions, they remain net sellers to the tune of Rs 48,213 crore so far this month.
“The Middle East conflict has created supply-side challenges in gas and fertilisers. India’s energy transition is also likely to accelerate. With the conflict likely ended, the debate on India’s AI exposure will resurface. The lack of direct AI play seems to be the most persistent challenge with potential AI disruption for Indian services exports aggravating matters,” said Ridham Desai, head of India Research and Chief India Equity Strategist at Morgan Stanley.
The boarder market Nifty Smallcap 100 rose 1.65 per cent and the Nifty Midcap 100 index rose 1.5 per cent each on Friday, taking their weekly gain beyond 7.5 per cent. All Nifty sectoral indices ended the week in the green, led by Nifty Realty, which surged 13 per cent, and Nifty Financial Services, which gained 10.8 per cent. Shriram Finance (up 15.2 per cent) and Adani Enterprises (up 13.8 per cent) emerged as the top Nifty gainers for the week.
“The Nifty is witnessing a steady recovery, and indications favour a gradual rise towards the 24,300–24,700 zone. A further cool-off in the volatility index, India VIX, which is now at 19, is adding to market comfort. Traders should maintain a positive yet cautious stance until the Nifty decisively holds above the key level of 23,500,” said Ajit Mishra, SVP, Research of Religare Broking.
