Market rallies, riding on the easing of Iran-Israel tensions, crude oil price drop, and FIIs' buying

Indian benchmark indices witnessed a sharp rally on Friday, with the Nifty50 surpassing the key psychological level of 25,000 and the BSE Sensex crossing 82,000, both gaining nearly 1 per cent.

- RITWIK MUKHERJEE

There are several reasons behind today's rally, including the return of FIIs to the market—albeit with limited buying—and the RBI's decision to ease provisioning rules on infrastructure loans, which led to a significant surge in financial stocks.

India's central bank announced on Thursday that the lenders will now need to keep aside 1 per cent of the loan amount for under-construction infrastructure projects as a safety measure against possible losses. This is a relaxation from its earlier draft rule, which had suggested setting aside up to 5 per cent.

The key driving factors behind the market rally, according to Vishnu Kant Upadhyay, AVP—Research & Advisory, Master Capital Services, include signs of easing tensions in the Iran-Israel conflict, as the US President stated that he would take two weeks before getting directly involved in the war, raising hopes that some negotiations might take place during this period.

Additionally, a drop in crude oil prices, India VIX falling below the 14 level, buying by FIIs, and the RBI's decision to reduce provisioning on infrastructure loans are also major reasons contributing to the bullish sentiment in the market.

Earlier, the escalating conflict between Israel and Iran has been dominating the markets this week, sending crude oil prices higher over concerns on the conflict, which will disrupt global supply, especially around the Strait of Hormuz, which facilitates the transportation of more than 20 per cent of global oil. That's what the experts feel.