Indian markets are expected to open positive on Monday as overall sentiment has improved in the global markets. As per latest news, US and Iran have agreed to end the war and this could boost global markets. However, as US market will be closed on Monday, the sentiment in Indian markets could be driven more by trends in the Asian and European markets. Overall markets are looking positive and we could see some buying coming in Indian equities on Monday. Markets have also witnessed higher volatility but it seems like we are at the end of US-Iran war and things could only improve from now onwards. Additionally, price of crude could drop in the coming week and this could lead to a sustained recovery in Indian equities.

Among investors, major issue would also be the decline in Indian currency. Indian currency is currently at all time lows and RBI has been taking action to support the rupee. However, those steps aren't currently bearing fruit and currency decline could lead to further issues for Indian economy. If we see a recovery in Indian currency after crude oil decline, we could see stronger moves in stock markets as well.

Indian equities staged a measured recovery on Friday as benchmark indices rebounded on the back of renewed buying interest in heavyweight banking counters and improving global sentiment. Investors appeared encouraged by signs of easing geopolitical tensions, particularly surrounding the ongoing US-Iran negotiations, while optimism tied to the global artificial intelligence investment cycle continued to support broader risk appetite. Although the domestic market remained trapped within a narrow trading range, financial stocks provided enough momentum to offset weakness in healthcare, IT, and energy counters. Market strategists noted that institutional liquidity flows continue to define the near-term trajectory, with domestic investors stabilizing sentiment amid persistent foreign selling pressure.

Sensex and Nifty Recover After Volatile Trading Session

India’s equity benchmarks closed in positive territory on Friday, reversing part of the weakness seen in recent sessions as investors returned to frontline banking and financial names. The rebound reflected cautious optimism rather than aggressive risk-taking, with market participants balancing global macroeconomic developments against domestic institutional flow dynamics.

The benchmark BSE Sensex advanced 231.99 points, or 0.31 per cent, to settle at 75,415.35. Intraday volatility remained elevated, with the index climbing as much as 627.61 points, or 0.83 per cent, to touch 75,810.97 during the trading session before surrendering a portion of gains toward the close.

Meanwhile, the broader NSE Nifty 50 gained 64.60 points, or 0.27 per cent, ending at 23,719.30. The recovery reinforced the market’s ongoing tendency to witness tactical buying at lower levels, particularly in sectors linked to domestic consumption and financial intermediation.

The trading pattern suggested that investors remain selective rather than fully risk-on, especially after weeks of fluctuating foreign capital flows and uncertainty tied to crude oil prices and geopolitical developments.

Banking Heavyweights Lead the Market Recovery

The rally was largely powered by heavyweight private-sector banking stocks, which emerged as the primary drivers of benchmark performance. Investors rotated back into high-quality financial counters after recent corrections, viewing the pullback as an opportunity to accumulate fundamentally strong institutions.

Among the top gainers within the Sensex pack were:

• Axis Bank
• ICICI Bank
• HDFC Bank
• Kotak Mahindra Bank
• Bajaj Finance
• Asian Paints
• Hindustan Unilever
• Trent

The performance of banking shares highlighted continued confidence in the resilience of India’s domestic credit cycle. Investors appear increasingly convinced that private lenders remain well-positioned to benefit from stable loan growth, relatively healthy asset quality, and improving operating leverage.

The broader financial ecosystem also reflected this optimism. Sectoral gauges linked to banking and finance posted some of the strongest gains across the market:

The strength in banking counters remains particularly important because financials carry significant weight in benchmark indices. Even moderate buying activity in the sector can materially alter overall market direction.

Global Optimism Improves Risk Sentiment

A meaningful portion of Friday’s positive momentum stemmed from improving global cues. Investors responded favorably to growing hopes surrounding progress in negotiations between the United States and Iran, which market participants interpreted as a potential easing of geopolitical tensions in the Middle East.

Any indication of diplomatic stabilization in the region carries significant implications for global energy markets and inflation expectations. Reduced geopolitical risk often lowers fears surrounding supply disruptions and sharp commodity price spikes, thereby improving investor confidence across emerging markets, including India.

According to market analysts, global enthusiasm surrounding artificial intelligence investments also continued to provide structural support to equities worldwide. Technology-driven capital expenditure themes, especially in AI infrastructure, semiconductors, and digital ecosystems, remain central to global portfolio allocation decisions.

Vinod Nair, Head of Research at Geojit Investments, said domestic markets traded with a mildly positive bias due to buying at lower levels and relatively constructive global signals.

He noted that expectations surrounding easing Middle East tensions contributed to investor optimism, while globally, the AI investment narrative remained a major market driver. Domestically, financial stocks led the recovery momentum.

Broader Market Performance Remains Mixed

Despite gains in benchmark indices, broader market participation reflected a more cautious undertone. Mid-cap stocks managed to edge higher, but small-cap counters remained under pressure, suggesting investors continue to favor relative safety over speculative exposure.

The BSE MidCap Select index rose 0.30 per cent, while the SmallCap Select index declined 0.60 per cent.

This divergence indicates that institutional investors remain highly selective in deploying capital. While quality large-cap companies continue attracting buying interest, smaller companies appear vulnerable to profit-taking and liquidity-sensitive corrections.

Market breadth also presented a somewhat balanced picture:

• 2,213 stocks advanced
• 1,971 stocks declined
• 179 stocks remained unchanged

Although advancing shares outnumbered losers, the margin was not overwhelmingly bullish, reinforcing the idea that markets are still navigating a phase of uncertainty rather than entering a broad-based rally.

Healthcare and IT Stocks Lag Behind

Not all sectors participated in Friday’s recovery. Defensive and export-oriented segments underperformed as investors rotated capital toward financials and cyclical opportunities.

The healthcare and hospital segments witnessed the sharpest declines:

Among the notable laggards within the Sensex were:

• Sun Pharma
• ITC
• Power Grid
• Bharat Electronics

Weakness in IT shares may partly reflect caution surrounding global growth trends and the uncertainty tied to overseas technology spending. Meanwhile, healthcare counters likely experienced profit-booking after recent outperformance.

Institutional Flows Continue to Shape Market Direction

One of the defining themes of the current market environment remains the contrasting behavior between domestic and foreign institutional investors.

According to exchange data, Foreign Institutional Investors (FIIs) sold equities worth Rs 1,891.21 crore in the previous session. Persistent foreign selling has capped upside momentum in recent weeks despite improving domestic macroeconomic conditions.

However, robust inflows from Domestic Institutional Investors (DIIs) have continued to cushion downside risks.

Vinod Nair observed that the market remains trapped within a range-bound structure because domestic liquidity support is offsetting the drag created by sustained foreign selling activity.

He characterized the prevailing market structure as a “buy-on-dips and sell-on-rallies” environment, indicating that investors are currently focused more on tactical positioning rather than directional conviction.

This framework has increasingly defined Indian equities over the past several weeks, where sharp declines attract value buying, but rallies struggle to sustain momentum due to valuation concerns and global uncertainties.

Weekly Gains Highlight Market Resilience

Despite ongoing volatility, benchmark indices still managed to end the week with modest gains, underscoring the resilience of domestic equities amid external pressures.

For the week:

• The BSE Sensex gained 177.36 points, or 0.23 per cent
• The NSE Nifty advanced 75.8 points, or 0.32 per cent

These gains may appear limited in percentage terms, but they remain significant considering the challenging backdrop of elevated crude oil prices, geopolitical tensions, and continued foreign capital outflows.

The ability of Indian markets to hold near record territory despite these headwinds reflects strong domestic participation, improving corporate earnings visibility, and sustained confidence in India’s medium-term growth trajectory.

Crude Oil and Global Markets Remain Key Variables

Energy markets remain a critical variable for investors monitoring Indian equities. Brent crude climbed 2.3 per cent to $104.7 per barrel, reviving concerns over imported inflation and potential pressure on India’s current account balance.

Higher oil prices traditionally pose challenges for India because the country remains heavily dependent on crude imports. Elevated energy costs can increase inflationary pressures, weaken the rupee, and complicate monetary policy decisions.

Nevertheless, global equity markets largely maintained a positive tone.

Across Asia:

• South Korea’s Kospi ended higher
• Japan’s Nikkei 225 closed in positive territory
• Shanghai’s SSE Composite index advanced
• Hong Kong’s Hang Seng index also gained

European markets traded positively during the session, while US equities had already ended higher on Thursday, providing additional support to investor sentiment globally.