Sensex, Nifty gain 1.3% on RBI norms, Trump's pause on Iran strike

Sensex jumps 1,046 points as banking stocks rally on relaxed RBI project norms while investor relief over US delay on Iran action lifts sentiment across global markets

Indian equity markets advanced on Friday, supported by gains in heavyweight stocks and optimism over the Reserve Bank of India’s (RBI’s) revised project finance guidelines. Investor sentiment was further lifted after US President Donald Trump indicated he would take two weeks to decide on possible intervention in the Iran-Israel conflict, easing concerns of an imminent escalation.

 

The Sensex closed 1,046 points, or 1.3 per cent, higher at 82,408, while the Nifty 50 ended the session at 25,112, up 319 points, or 1.3 per cent. HDFC Bank, Reliance Industries, Bharti Airtel and ICICI Bank contributed more than half of the gains, each posting their biggest single-day advance since May 15. For the week, both indices gained 1.6 per cent. The market capitalisation of companies listed on the BSE rose by ₹5 trillion to ₹448 trillion. 

 

Financial stocks led the rally. HDFC Bank, which rose 1.6 per cent, was the largest single contributor to the Sensex’s rise. 

 

The banking sector was lifted by the RBI’s finalised norms on project finance, which require only a 1 per cent general provision on funded outstandings during the construction phase, significantly lower than the 5 per cent proposed under draft rules released in May last year. The relaxation, which excludes commercial real estate projects, will come into effect from October 1, 2025. The Nifty Bank index gained 1.2 per cent. 

 

Foreign portfolio investors (FPIs) were net buyers, purchasing nearly ₹8,000 crore of equities, while domestic institutions withdrew ₹3,050 crore. Trading volumes were elevated due to portfolio adjustments tied to the latest BSE and FTSE index rebalancing.

 

Passive funds tracking the Sensex pared positions in Nestlé India and IndusInd Bank ahead of their exclusion from Monday, while buying shares in new entrants Trent and Bharat Electronics. Other Sensex components also saw adjustments on account of weight adjustments. 

 

Geopolitical developments lent further support. A White House statement indicated a potential diplomatic opening in the Iran-Israel standoff, with Trump suggesting he would wait two weeks before deciding whether to back Israeli military action. The statement, delivered on Thursday, was interpreted as a tempering of previous hawkish rhetoric. Trump said there was a “significant chance” of negotiations with Iran, although no immediate talks were scheduled.

 

Tensions remain high, with Israel continuing strikes on Iranian nuclear facilities and vowing to remove the current regime in Tehran. Iran has reiterated it will not engage with Washington as long as hostilities persist. Brent crude prices retreated 3 per cent to $76.42 on Friday (7.58 pm IST), though they remain up 21 per cent for the month. Gold fell slightly to 3,371.85 per ounce, and declined 2.4 per cent over the week. 

 

“Equity indices surged as West Asia tensions eased, reducing the immediate risk of military escalation and lifting sentiment among foreign investors,” said Vinod Nair, head of research at Geojit Financial Services. The correction in crude prices also supported the market, he said.

 

Market breadth was broadly positive, with 2,463 stocks advancing versus 1,484 declining. Analysts said the outlook remained constructive, although geopolitical risk would remain a key variable in the coming sessions.

 

“A decisive move above 25,200 on the Nifty 50 would signal an end to the ongoing five-week consolidation phase and open the path toward the 25,600–25,800 range,” said Ajit Mishra, senior vice-president-research at Religare Broking. “In the absence of any major domestic triggers, global developments will continue to guide investor sentiment”.