Indian equities are off to a bumper start to the new fiscal year, FY27, as both key indices rallied over 1.5%, snapping a two-day sell-off and recovering from the steepest monthly drop in six years in March.
Market sentiment improved on the back of a drop in crude oil prices and rising hopes that the US-Iran war could end soon, which gave a much-needed boost to Dalal Street investors. The strong rebound in financials and auto stocks helped lift the markets, with the Nifty 50 eventually settling 1.56% higher at 22,676, while the Sensex closed at 73,134, up 1.65% from Monday’s close.
The broader markets also mirrored the sharp rebound, with both the Nifty Midcap 100 and Nifty Smallcap 100 indices closing higher by 2.3% and 3.3%, respectively.
Among sectoral indices, the Nifty PSU Bank index emerged as the top performer, surging 3.70%, while the Nifty Media, Nifty Chemicals, Nifty Metal, Nifty Realty, Nifty Auto, and Nifty IT indices all rallied over 2%. The Nifty Pharma index was the only sectoral loser, slipping 1%.
US President Donald Trump said Washington could end its military attacks on Iran within two to three weeks, adding that Tehran would not need to strike a deal as a prerequisite for the conflict to wind down, Reuters reported.
Vinod Nair, Head of Research, Geojit Investments Limited, said, “Indian equity markets opened FY27 on a strong note, driven by improving risk appetite following US President Donald Trump’s remarks hinting at a potential resolution to the West Asia conflict. Broad-based buying lifted benchmark indices, with mid- and small-cap stocks outperforming large caps, aided further by a stabilising rupee and softening crude oil prices.”
Defence, banks and capital market stocks drive broad-based rebound
Defence and auto stocks led the recovery rally, with Garden Reach Shipbuilders, Ola Electric, and Mazagon Dock Shipbuilders emerging as top gainers among Nifty 500 constituents, surging 19.6%, 13.6%, and 12.3%, respectively.
Other defence stocks such as Cochin Shipyard, Bharat Dynamics, and BEML also surged up to 12.2%.
The rally was supported by sustained optimism around India’s defence manufacturing push and a recent wave of large procurement approvals, keeping the sector firmly in focus for investors seeking both momentum and long-term structural growth.
A strong business update from DMart drove the stock 8% higher, while Ircon International rebounded 9%. Another railway stock, RailTel Corporation, advanced 7.2% to ₹263.8 apiece.
Meanwhile, capital market stocks such as Motilal Oswal Financial Services (MOSL), Angel One, and BSE ended with gains of up to 7.4% after the Reserve Bank of India (RBI) deferred its circular on capital market exposures of banks for a period of three months.
Groww, CAMS, Nippon Life India AMC, HDFC AMC, and Anand Rathi Wealth also closed higher in the range of 3–6%.
Similarly, all state-owned banks staged a strong recovery, with Punjab & Sind Bank rallying 6.6% and Bank of Maharashtra surging 5.8%. This was followed by UCO Bank, Central Bank of India, Indian Bank, Union Bank of India, and State Bank of India, all rising over 4%.
Select stocks decline despite broader rally
Acutas Chemicals was the top laggard, falling 9% to ₹2,332, while Ipca Laboratories and LG Electronics India were also down 5.8% and 3.8%, respectively. While broader auto stocks staged a strong recovery, select stocks such as Hyundai Motor India and Ashok Leyland closed lower, declining 3.5% and 3.3%.
Meanwhile, the sell-off in Blue Star extended into the third straight session, with the stock falling another 3.4% to ₹1,556 apiece, marking its lowest level since June 2025. HDFC Life Insurance shares also dropped 3%, hitting their lowest level since June 2024.
Other stocks, including Bharti Hexacom, Torrent Pharmaceuticals, OneSource Specialty, 3M India, IRB Infrastructure, Supreme Industries, Cipla, Piramal Finance, Navin Fluorine International, Go Digit General Insurance, and Craftsman Automation, all declined over 2%.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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