Sensex, Nifty rally 1% as Brent crude drops to $72

Markets extend recovery as crude cools

Sensex and Nifty extended their recovery in Thursday’s trade, rising about 1 per cent each as crude oil prices fell for the fourth straight session. Benchmark indices were supported by softer crude, firmer Asian cues, and gains in banks and autos. The move helped ease near-term macro concerns, especially around the external sector, after recent volatility driven by West Asia headlines and foreign selling.

Nifty 50 reclaimed levels above 24,100 in early trade, while Sensex was up more than 400 points at the open. As the session progressed, Sensex surged over 600 points and Nifty moved closer to the 24,200 mark. Investors remained watchful of monsoon progress and global central bank signals, but the day’s dominant driver was the continued slide in crude.

Brent crude falls to multi-session lows on peace progress

Brent crude fell another 1.76% to $12.44 a barrel and hit a low of $12.64 per barrel during the broader decline, dropping below levels seen before the Iran conflict erupted. Market participants linked the pullback in crude to improving sentiment around US-Iran peace talks and an interim peace agreement.

Oil prices corrected sharply as tanker traffic through the Strait of Hormuz gradually returned to normal after the interim US-Iran arrangement. The Strait of Hormuz is a critical route for global oil shipments, so any easing in disruption risks tends to be reflected quickly in crude prices. With the fear premium coming off, equities in oil-importing economies such as India benefited from the improved macro setup.

Why lower oil matters for India’s macros

For India, which imports more than 85% of its crude oil requirements, lower crude prices are widely seen as a macro positive. Lower oil reduces the import bill, eases inflationary pressures, improves the current account deficit and the balance of payments, and can create room for stronger economic growth. In the market commentary cited, these factors were directly linked to improving the outlook for GDP growth and inflation in FY27.

ICICI Securities highlighted the equity-oil linkage, noting that oil prices and Nifty have an inverse correlation above the $10-100 per barrel mark. It added that the current slump in prices is a potential positive for Indian equities because the external sector situation is likely to improve as the oil import bill recedes. With crude now well below those higher thresholds, traders treated the move as supportive for risk appetite.

Index levels and the day’s key triggers

Thursday’s rally built on follow-through buying after Wednesday’s reversal. The combination of lower crude, positive global cues, and heavyweight buying pushed Nifty above 24,100 and kept risk appetite firm through the session. Asian market strength added to the tone, while domestic investors tracked the macro relief from energy prices.

Earlier in the week, markets also responded positively as easing concerns over the West Asia conflict and lower crude helped extend gains. The progress in US-Iran talks was repeatedly cited as a reason Brent stayed below the closely watched $10-per-barrel mark in parts of the week’s trade.

Sectoral action: banks, autos and cyclicals lead

Broader participation was visible, with rate-sensitive and cyclical pockets outperforming. Realty, auto, financial services, cement, and banking indices led gains, while metals and media lagged. The leadership from banks and autos was important because these sectors carry significant weight in headline indices and tend to move strongly when macro concerns ease.

Heavyweight stocks across banking, financial services, information technology, energy, and consumer goods attracted fresh buying interest during the session, amplifying the index move.

Currency support: rupee appreciation adds to resilience

The rupee’s appreciation was also flagged as a supportive factor for sentiment. In one market view, the currency strengthened from 96.96 against the US dollar in May to around 94.32, improving the market’s comfort on external balances. Separately, the rupee strengthened 43 paise to 94.68 against the US dollar in early trade on Monday, noted as its highest level since May 8, as falling crude and easing tensions supported the outlook for inflation and the balance of payments.

This currency backdrop matters because lower crude and a firmer rupee can work together to reduce imported inflation pressures, which investors often interpret as supportive for domestic macros.

Earlier sessions: peace headlines and earnings also moved markets

The week’s tone was shaped by both geopolitics and corporate developments. On Monday, markets rallied in early trade as reports suggested the United States and Iran had reached an agreement aimed at ending the conflict and reopening the Strait of Hormuz. In that phase, Brent was cited at $13.91 per barrel, down 3.92%, while WTI was at $10.90, down 4.69%.

Mid-week, Indian markets ended higher on Wednesday with Sensex closing up over 609 points at 77,496 and Nifty rising nearly 182 points to 24,178. The move was supported by strong earnings and optimism around a possible early end to the Middle East conflict. Maruti Suzuki shares jumped 5% even as its standalone March-quarter profit declined 7% year-on-year to Rs 3,591 crore. Eternal shares were up over 2% after the Zomato and Blinkit-parent reported a 346% year-on-year surge in consolidated net profit to Rs 174 crore for the fourth quarter.

Market impact: what the crude swing changed

The most direct impact was on expectations for India’s inflation and external balances, which influenced sector positioning. Lower crude was repeatedly described as easing pressure on the current account deficit and supporting the rupee, and that fed into a broader bid for rate-sensitive and growth-linked sectors. Autos and real estate were cited among areas that can benefit when macro conditions improve, and banks helped carry the indices higher as heavyweight buying returned.

At the same time, the narrative showed how quickly the market can reverse when crude rises. Sensex and Nifty dropped up to 0.5% on Tuesday as rising oil prices spooked investors and wiped off most of the gains recorded in the previous session, underlining the sensitivity to energy prices during a geopolitically uncertain period.

Analysis: why this rally is tied closely to crude

The price action reflects a clear chain: de-escalation signals reduce disruption risk in oil routes, crude falls, and that lowers macro stress for an oil-importing economy. With Brent sliding to the low-$10s, the market interpreted the move as meaningful for India’s oil import bill and near-term inflation trajectory.

ICICI Securities’ point about inverse correlation above $10-100 highlights why the earlier spike was viewed as a threat and the subsequent correction as relief. Alongside that, the rupee’s strengthening added a second layer of support by improving confidence in external stability during a period of foreign outflows and shifting global risk appetite.

Conclusion: investors track crude, monsoon and global policy cues

Thursday’s gains extended a recovery driven mainly by the ongoing decline in crude prices and improved sentiment on US-Iran peace progress, with banks and autos leading the move. With Nifty back above 24,100 and approaching 24,200, the market’s near-term focus remains on how durable the crude downtrend is, along with monsoon developments and signals from global central banks. Further clarity is expected as peace-related steps around the Strait of Hormuz and global energy flows translate into sustained moves in oil prices.