Snapping a three-session-long losing streak, the Indian benchmark indices rallied 1.3% each on Friday amid sustained buying across sectors because of an ease in geopolitical concerns. The Nifty50 reclaimed the key psychological level of 25,000 and the BSE Sensex crossed 82,000 after news reports indicated a possible de-escalation in the Iran-Israel conflict, with the U.S. signalling a delay in potential action, which led to a softening in crude oil prices.

The 30-share Sensex closed at 82,408.17, up by 1,046 points, or 1.29%, and the 50-share Nifty ended 319.95 points, or 1.29%, higher at 25,112.4. During the session, the Sensex touched an intraday high of 82,488.21, while the Nifty hit a high of 25,136.20.

In a similar trend, the broader markets settled the day’s trade on a firm note, with the Nifty Midcap 100 and Smallcap 100 indices surging 1.46% and 1.01%, respectively.

“In the broader markets, a rapid fall in VIX index and buying was witnessed in rate sensitives and consumer-oriented sectors like finance, auto and realty. [This was] in anticipation of better Q1FY26 results led by rate cut benefits, drop in inflationary pressure, and rebound in a consumer spending," said Vinod Nair, Head of Research, Geojit Investments.

The volatility index (India VIX) dropped by 4.09% to 13.67 points, indicating improving market sentiments.

On the sectoral front, all indices closed in positive terrain, led by realty, banking, and financial services stocks. The rally was driven by the Reserve Bank of India’s decision to ease provisioning rules on infrastructure loans, which led to a significant surge in financial stocks, with Bank Nifty, Nifty PSU Bank, and Nifty Private Bank rising over 1% each.

Among the BSE Sensex firms, barring Maruti Suzuki India, the other 29 constituents ended in the green. The Top 5 gainers were Bharti Airtel, Mahindra and Mahindra, Power Grid, Reliance Industries (RIL), and Nestle India, rising in the range of 3.27% and 1.97%. On the other hand, Maruti Suzuki shares ended in the red with a marginal loss.

Here are the five factors that fuelled the rally today:

Ease in geopolitical tensions

According to Nair of Geojit Investments, market sentiment improved as Middle East tensions eased after the risk of immediate military action went down as the U.S. is expected to have a dialogue with Iran. The development led the crude price to correct, favouring domestic markets and boosting foreign investors’ sentiment, he added.

“Sentiment improved after news reports indicated a possible de-escalation in the Iran-Israel conflict, with the U.S. signaling a delay in potential action, which led to a softening in crude oil prices,” said Ajit Mishra, SVP-Research, Religare Broking.

Softer RBI project finance norms

The market rally was also driven by strong gains in the banking and financial space after RBI slashed the provisioning requirement for project finance in the construction phase to 1% from the earlier proposal of 5%. The move is expected to provide huge relief to lenders, including commercial banks, pushing banking stocks higher.

FPIs continue buying

Foreign portfolio investors (FPIs) extended their buying streak in Indian equities for the third consecutive session on Thursday. FPIs' net purchased shares worth ₹891 crore, NSE data showed.

Sustained buying by domestic institutional investors (DIIs) also provided cushion to the market. DIIs were net buyers for the 25th straight session, infusing ₹606 crore into the equity market on June 19, according to exchange data.

Fall in crude prices

Market sentiment was further bolstered by a drop in brent crude oil prices after the U.S. delayed a decision on military action against Iran. Brent futures slid 2.4% to $76.96 per barrel, while the U.S. West Texas Intermediate (WTI) crude for July rose marginally by 0.7% to $75.67.

The White House has said that President Donald Trump will decide within the next two weeks whether the U.S. will get involved in the Iran-Israel conflict.

Technical factor

The Nifty moved up sharply after three days of consolidation, resuming its short-term rally. The index has reclaimed its 21-day EMA, which could provide further momentum for an upward move, said Rupak De, Senior Technical Analyst at LKP Securities. “Support is now placed at 24,850, and the index remains a ‘buy on dips’ as long as it holds above this level. On the higher side, it may continue advancing towards 25,350 and beyond."

Mishra of Religare Broking says that the outlook remains positive, and a decisive move above 25,200 on the Nifty would signal the end of the ongoing five-week consolidation phase and open the path towards the 25,600–25,800 zone. “In the absence of any major domestic event, global markets will continue to guide sentiment. We maintain our positive yet cautious stance and advise focussing on stock selection, particularly in line with sectoral trends," he said.

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