Domestic equities rallied on Friday, logging their best weekly gain in more than five years, as the United States-Iran ceasefire — although tentative — helped improved investor sentiment and eased concern over disruption in oil prices.
The Sensex and Nifty 50, the benchmark indices, were back in the black after remaining in the red for the previous six weeks.
The Sensex closed at 77,550, up 919 points, or an increase of 1.2 per cent, while the Nifty 50 ended at 24,051, gaining 276 points, which too is a spike of 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 market capitalisation of the BSE-listed firms rose on Friday by ₹6.4 trillion to ₹451.2 trillion ($4.87 trillion), taking the weekly increase to ₹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 a barrel on Friday.
The decline offered relief to investors, who were worried about the inflationary impact of elevated energy prices.
Higher prices of crude oil typically weigh on India’s growth and corporate earnings, given the country’s heavy dependence 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 (US) and Iran 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 monitor the outcome of the 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 West Asia, 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) during the day were net buyers of stocks, purchasing equities worth ₹672 crore, with Friday being the first net-positive day in terms of FPI flows since the war began.
The last time FPIs were net buyers was on February 25 while domestic institutional investors bought equities worth ₹410 crore.
While the intensity of FPI selling has reduced over the past three sessions, they remain net sellers of ₹48,213 crore so far this month.
“The conflict has created supply-side challenges in gas and fertilisers. India’s energy transition is also likely to accelerate … the debate on India’s exposure to artificial intelligence (AI) 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, Morgan Stanley.
On Friday, the broader market Nifty Smallcap 100 rose 1.65 per cent and the Nifty Midcap 100 index went up 1.5 per cent, taking their weekly gain beyond 7.5 per cent.
All Nifty sectoral indices ended the week in the black. This was 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 24,300-24,700. A further cooloff 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, senior vice-president (research), Religare Broking.