ICICI, HDFC Bank Lead Financials Rally as Fuel Retailers Power Oil And Gas Stocks While Eicher Motors Revs Up Autos 

Mumbai, May 25: Indian benchmark indices surged on Monday in a broad-based rally led by financials, oil marketing companies and automobile stocks, as falling crude oil prices and optimism surrounding a possible US-Iran peace agreement boosted investor sentiment. 

The Nifty 50 climbed 1.3% to reclaim the 24,000 mark, while the Sensex advanced more than 1,000 points to hit a two-week high. The rally came after Brent crude prices plunged over 5% to below $100 per barrel following comments from US President Donald Trump indicating progress toward reopening the Strait of Hormuz. 

Financials Spearhead Rally

Banking and financial stocks emerged as the biggest drivers of the rally as improving global risk appetite triggered buying in heavyweight lenders.

Nifty Financial Services flew on the wings of heavyweight private lenders. Source: NSE 

Shares of HDFC Bank and ICICI Bank rose sharply, helping lift the broader financial pack. Analysts noted that banking stocks had been among the worst-hit during the recent geopolitical selloff due to their higher foreign institutional investor exposure.

HDFC Bank rose 2.7% to settle at Rs 787 while the other private sector heavyweight lender ICICI Bank increased 2.3% to close at Rs 1,293.

The rebound in financials also came amid easing concerns around imported inflation and bond yields after crude prices retreated sharply.

Oil and Gas Stocks Powered by Fuel Retailers

The oil and gas index also aided the rise of the markets, rising 1.3%, its climb powered by state fuel retailers as softer crude prices improved expectations around marketing margins after the oil marketing firms went for a fourth fuel price hike in 10 days.

Shares of Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation rallied as investors bet that lower crude prices could reduce under-recovery pressures and improve profitability. 

Indian Oil Corporation rose 3.2% at Rs 144, Bharat Petroleum Corporation went up 4.3% at Rs 308 while Hindustan Petroleum Corporation rose 3.5% at Rs 403.3. 

The decline in oil prices is viewed as particularly positive for India, which imports the majority of its crude oil requirements, as it helps ease inflationary pressures and improves the country’s macroeconomic outlook.

Auto Stocks Gain on Improving Sentiment

Automobile shares also participated strongly in the rally, their index rising 1.7% aided by improving risk appetite and falling energy prices.

Eicher Motors climbed the most on the index after the company reported stronger-than-expected quarterly earnings driven by healthy Royal Enfield sales and resilient margins. More importantly, investors chose to overlook the hit on the margins from commodity costs, opting to cheer instead. Eicher Motors rose over six percent to close at Rs 7,414.

Nifty Auto got a great boost from motorcycle maker Eicher Motors even though the index pared gains at close. Source: NSE

Lower crude prices are also seen as beneficial for the broader auto sector because they ease input cost pressures and support consumer sentiment.

Broader Markets Remain Firm

The rally extended beyond frontline indices, with midcap and smallcap stocks also witnessing healthy buying interest. 

Most sectoral indices ended in positive territory, though healthcare stocks underperformed. Max Healthcare Institute declined after weaker quarterly growth disappointed investors. 

Meanwhile, the Indian rupee strengthened for a third consecutive session as easing oil prices and RBI support improved currency market sentiment. 

Source:

• NSE