A two-week ceasefire in West Asia and a sharp drop in Brent crude oil prices following Iran's agreement to reopen the Strait of Hormuz led to one of the sharpest equity market rallies in recent times, with investors’ wealth galloping by Rs 17 lakh crore.
The benchmark indices BSE Sensex ended the Wednesday session with a gain of 2,946 points, or 3.95%, at 77,562.90, while the NSE Nifty50 closed 874 points, or 3.78%, higher at 23,997.35.
The overall market capitalisation of BSE-listed firms grew to Rs 446 lakh crore from Rs 429 lakh crore in the previous session, making investors wealthier by a whopping Rs 17 lakh crore. The rupee traded stronger by 49 paise at 92.58.
The relief rally came after US President Donald Trump said that Washington would suspend military actions against Iran for two weeks and Iran accepted the ceasefire plan. This marked a pause to the ongoing conflict which began on February 28 after US and Israeli forces launched an attack on Tehran.
Moreover, Iran’s conditional reopening of the Strait of Hormuz triggered a sharp crash in Brent crude prices, down over 16.5% to around $91 per barrel, which is a major tailwind for equities. For import-dependent economies like India, lower crude prices should boost the growth outlook, shore up the rupee, and attract fresh foreign capital inflows amid easing inflation pressures.
Sectorally, gains were broad-based, with all indices ending in the green. Auto and Realty led the rally with gains of over 6%, while Consumer Durables, Oil & Gas, Telecom, Infra, PSU Banks, and Private Banks advanced in the range of 3–5%. Broader markets outperformed the benchmarks, with both Nifty Midcap and Small cap indices advancing more than 4% each.
The surge in the Indian market mirrored a rally in global markets. Asian equities such as Japan’s Nikkei, Hong Kong’s Hang Seng, Korea’s Kospi and China’s Shanghai Composite rallied between 3% and 6%.
Ajay Menon, MD & CEO – Wealth Management (retail broking and distribution), Motilal Oswal Financial Services said that the ceasefire has reduced near-term geopolitical uncertainty, supporting risk-on flows into equities—particularly in emerging markets like India, which had witnessed record FII outflows in March.
“Additionally, the sharp correction in crude prices is a key positive for India, as it eases inflationary pressures, narrows the current account deficit, supports the rupee, and strengthens fiscal dynamics. With macro stability in place, market focus is now shifting to Q4FY26 earnings. Stock and sector differentiation is likely to increase, with markets rewarding earnings visibility over liquidity-driven momentum,” added Menon.
The RBI’s decision to maintain the repo rate at 5.25% in its latest MPC meeting is also welcomed by the street.
“The decision was largely in line with expectations. From here, the RBI is likely to continue with a data-dependent approach, suggesting an extended pause in rates. The broader policy stance is also likely to remain neutral, although liquidity conditions may continue to be managed in an accommodative manner. Overall, this policy mix appears neutral to marginally supportive for equities, fixed income and the foreign exchange market,” said Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Group.
Menon said that the near-term outlook remains positive, supported by stable macros, improving sentiment, and liquidity conditions. However, the sustainability of the rally will depend on progress in geopolitical negotiations, easing of supply disruptions, and normalization of energy shipments. Movements in crude oil prices, the rupee, and FII flows will remain key determinants of near-term market direction, he added.