Indian shares staged their most powerful weekly recovery in over five years, ending a bruising six-week downward spiral as a diplomatic breakthrough in West Asia sent crude oil prices tumbling and restored investor confidence.

The blue-chip NSE Nifty 50 index closed 1.16% higher on Friday at 24,050.60, while the S&P BSE Sensex climbed 1.2% to 77,550.25. For the week, both indices jumped approximately 6%, their sharpest percentage gain since February 2021.

Geopolitical Thaw Cools Crude 

The primary reason was the announcement of a two-week suspension of military strikes between the United States and Iran. The move reopened the Strait of Hormuz, a critical route for global energy supplies. Hence, Brent crude plunged from $115 to the $95-$98 range.

The rally was broad-based, with the risk-on sentiment lifting interest-rate sensitive sectors.

• Banking & Auto: The Nifty Bank and Auto indices outperformed, with the banking gauge jumping over 8% during the week.
• Volatility: The India VIX, a measure of market fear, plummeted nearly 20% over the five sessions to 19.23, suggesting traders are unwinding defensive hedges.
• Laggards: Information Technology (IT) remained the sole outlier, underperforming as cautious margin commentary from heavyweights like TCS offset the broader optimism.

FII Bleed, Domestic Funds Hold Firm 

While Foreign Institutional Investors (FIIs) have been heavy sellers throughout March, the pace of selling decelerated significantly this week. Exchange data showed that Domestic Institutional Investors (DIIs) provided a robust floor, absorbing the selling pressure as retail participation via mutual funds remained resilient.

The Indian rupee also caught a breather, appreciating to 92.41 against the U.S. dollar, up from record lows touched just a week prior.