Sensex jumps 1,000 points: US-Iran peace deal hopes and other factors behind the rise explained; can gains sustain?

India’s stock market saw a sharp rise on May 25, 2026, with the Sensex jumping 1,000 points (1%) to 76,387 and the Nifty 50 climbing over 1% to 23,996, as optimism over a US-Iran peace deal lifted investor confidence. The BSE 150 Midcap and BSE 250 Smallcap indices also rose 1% each, pushing total market capitalization to ₹468 lakh crore from ₹463 lakh crore the prior session. Hopes of a US-Iran agreement, which could reopen the Strait of Hormuz—a critical oil route—fueled gains, despite ongoing US sanctions. US President Donald Trump indicated progress but warned against rushing a deal, leaving terms and timelines unclear. Brent crude dropped over 5% to below $98 per barrel, easing inflation concerns and fiscal strain on India. The Indian rupee appreciated 35 paise to 95.34 against the dollar, supported by RBI Governor Sanjay Malhotra’s pledge to stabilize forex markets. A weaker dollar index and falling US 10-year bond yields (to 4.49%) further improved risk appetite for emerging market stocks. Analysts noted the market’s resilience amid uncertainty, attributing gains to economic strength and investor confidence. However, sustained progress in US-Iran talks and lower oil prices will be key to maintaining momentum. The RBI’s intervention and foreign investor returns remain critical for long-term stability.