Mumbai: Indian equities rose more than 1% Monday, with the Nifty posting its strongest single-day gains since April 1, as optimism over a potential US-Iran agreement to reopen the Strait of Hormuz caused oil prices to slide below $100 a barrel. The rupee, too, climbed for the third straight session, while bond yields slid closer to 7%.

The NSE Nifty 50 advanced 1.3%, or 312.40 points, to close at 24,031.70, reclaiming the 24,000 mark after about two weeks, while the S&P BSE Sensex climbed 1.4%, or 1,073.61 points, to 76,488.96.

Sentiment was buoyed after reports the US and Iran were nearing an agreement that could ease tensions and restore energy flows. US President Donald Trump said over the weekend that both sides had largely negotiated a memorandum of understanding, according to Reuters.

Brent crude declined more than 5% to around $98 a barrel, easing concerns over inflation.

Asian markets rallied in tandem, with Taiwan gaining 3.3%, Japan 2.9%, and China 1%, while Hong Kong and South Korea were shut.

“With every day of delayed truce, there is a chance that the inflation can be higher, so the earlier we have a solution, the better,” said George Thomas, equity fund manager, Quantum AMC.

Lower Risk Outlook
“Even if there was to be a resolution immediately, it would take some time for things to normalise,” said Thomas of Quantum. “While a resolution may not be immediate, incrementally, things will be positive.”
Volatility eased, with the India VIX declining 6.7% to 16.7, signalling that risk expectations are easing. The rupee climbed to 95.23 per dollar Monday, its highest in more than two weeks, versus its previous close of 95.69. Benchmark 10-year bond yields fell to 7.025% Monday, from 7.088% Friday, according to investing.com data. Technically, the rally was aided by short covering, with the index breaking key levels. “Nifty witnessed a decisive breakout and closed strong- driven by short covering,” said Rajesh Palviya, Head of Research, Axis Securities. “Call writers are on the backfoot and if Nifty sustains over 24,000 levels, gains of 200-300 points are expected on an immediate basis.”

Palviya said further gains toward 24,800 levels could materialise if positive triggers emerge on the geopolitical or domestic front. Sectorally, the gains were broad-based, with financial stocks leading the rally as improving macro sentiment supported the space. The Bank Nifty and Nifty Financial Services indices rose 2.3% and 2.2%, respectively, while PSU banks gained 2.9% and private banks 2.1%. Auto and realty indices also advanced. “Banking stocks are available at decadal low valuation which is lending comfort to investors,” said Thomas. “But if this crisis prolongs for a longer time, then there could be an impact on credit cost.”

In the Nifty500 pack, 11 stocks’ closing prices crossed above their 200 DMA (Daily Moving Averages) on May 25, 2026, according to stockedge.com’s technical scan data. Traders use the 200-day daily moving average (DMA) as a key indicator for determining the overall trend in a particular stock. As long as the stock is priced above the 200-day SMA on the daily timeframe, it is generally considered to be in an overall uptrend. Take a look:

Taiwan overtook India in stock market value, powered mainly by a breakneck rally in the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co.

The island’s market capitalization climbed to $4.95 trillion as of Monday, according to data compiled by Bloomberg. India’s value has dropped to $4.92 trillion. Taiwan’s stock market is now the fifth largest in the world, behind only the US, mainland China, Japan and Hong Kong.

Taiwan’s ascent up the global equity rankings is largely driven by TSMC, which now accounts for about 42% of the benchmark index, representing intense market concentration. The chipmaker’s shares have rallied 49% this year as it has benefited from the artificial intelligence trade, in which its semiconductors have a dominant market position.

The surge in the island’s market value highlights intense optimism in AI that is triggering a global rally in tech shares, disproportionately benefiting manufacturing hubs such as Taiwan and South Korea. India, on the other hand, is grappling with surging energy cost, slowing corporate earnings growth and the lack of companies directly linked to the AI buildout.

“Taiwan’s rising market capitalization is fundamentally a reflection of its heavy concentration in tech hardware, which is currently at the center of the AI investment cycle,” said Yi Ping Liao, a fund manager at Franklin Templeton. “Markets with limited exposure to tech hardware are increasingly being overshadowed by tech hardware–heavy markets such as Taiwan and Korea.”

New regulations are also in TSMC’s favor. Taiwan’s financial regulator last month increased the limit that domestic funds can invest in a single stock. Under the new guideline, funds that invest solely in Taiwanese stocks can hold up to 25% of their net assets in any listed company whose weighting exceeds 10% in the Taiwan Stock Exchange, up from a previous limit of 10%. Currently, only TSMC meets the criterion.
The change may help lure in more than $6 billion of inflows to Taiwan, JPMorgan Chase & Co. said in a research note.While Taiwan has overtaken in market value, India’s $4.15 trillion-dollar economy — among the fastest growing in the world — still trumps the island’s $977 billion gross domestic product, according to International Monetary Fund estimates.

Indian stocks have fallen this year amid record foreign outflows, driven by elevated valuations and a weakening rupee. Higher energy costs have also stoked inflation concerns and clouded growth prospects.

Global funds have sold nearly $24 billion of local equities so far this year as they chased the AI boom in Taiwan and Korea. India’s gauge is down 8%, heading for its first annual drop after a decade of gains. India’s weight in the MSCI emerging markets index has also fallen to about 12% from 19% last year.

“India has been quite ignored for the better part of two years,” Alison Shimada, portfolio manager at Allspring Global Investments, told Bloomberg TV on Monday. “It is an expensive market so one has to be selective, but I think in terms of financialization of savings, it is very prominent in India and people are moving into financial assets,” she said.

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