Sensex, Nifty Rise as Rupee Hits Over Two-Month High Amid Easing Iran War Concerns

Indian equity benchmarks opened higher on Thursday and the rupee strengthened to its best level in over two months, as investor sentiment got a lift from US President Donald Trump's comments suggesting the renewed conflict with Iran may not turn into a prolonged escalation.

The BSE Sensex rose as much as 233 points, or 0.31 percent, to trade near 76,804 in early deals, while the NSE Nifty50 climbed about 73 points, or 0.31 percent, to trade close to 23,987. Both indices had already indicated a firm start in pre-open trade, with Gift Nifty pointing to a gap-up open well before the local market opened.

Rupee jumps to strongest level since June

The Indian rupee opened 69 paise stronger against the US dollar at 94.29, its highest level since late June, extending gains after settling at 94.98 to the dollar in the previous session. Traders pointed to strong foreign currency non-resident (FCNR) deposit inflows as a key driver behind the currency's move, alongside the broader improvement in risk appetite following Trump's remarks that the latest round of US-Iran hostilities would likely not stretch on for "too long."

Banks and metals lead sectoral gains

ICICI Bank, Adani Ports and Special Economic Zone, and Axis Bank were among the top gainers on the Nifty50 in early trade. Sectorally, the Nifty PSU Bank index outperformed with a gain of more than 1 percent, while the Nifty Private Bank and Nifty Metal indices each added around 0.8 percent. On the flip side, the Nifty IT and Nifty FMCG indices were the session's laggards, with IT stocks including Tech Mahindra, HCL Tech, Infosys and TCS among the names trading lower even as the broader market advanced.

Broader market indices also participated in the rally, with the Nifty MidCap and Nifty SmallCap indices up 0.29 percent and 0.82 percent respectively in early trade.

Volatility gauge drops sharply

A notable feature of Thursday's session was a sharp pullback in the Nifty India Volatility Index, which fell more than 7 percent to trade near 10.75, signalling that investors are pricing in materially less near-term turbulence than they were in prior sessions, when fears of a broader Middle East escalation had kept markets on edge.

Global and domestic backdrop

The gains in Indian markets tracked a steadier tone in Asian and US equities, with Wall Street rebounding from a three-session decline on renewed buying in AI-related technology stocks. Foreign institutional investors bought Indian equities worth roughly Rs 6,688 crore on September 1, while domestic institutional investors added a further Rs 2,813 crore of purchases, providing an additional cushion of demand even as concerns about the Iran conflict's impact on global oil prices persist in the background. With Brent crude still elevated following the resumption of hostilities, investors are likely to keep a close watch on further developments out of the Middle East for cues on whether Thursday's optimism can be sustained through the rest of the week.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.