Mumbai, May 7, 2026, 16:32 IST
Indian equities lost some ground Thursday, pulling back after Wednesday’s oil-fueled rally. Investors booked profits as they mulled the impact of a potential U.S.-Iran deal on energy costs. The Sensex ended 114 points lower at 77,844.52, down 0.15%, while the Nifty 50 edged down just 4.30 points to 24,326.65, a dip of 0.02%.
This shift has real impact: India relies heavily on imported oil, so when Brent crude drops, it can take some heat off inflation, support the rupee, and help corporate margins. Brent slipped under $100 a barrel on Thursday. The rupee also gained ground as traders unwound rupee short positions and moved to sell dollars in the forwards market.
Traders are pinning hopes on negotiations to pause the U.S.-Iran conflict and shore up stability around the Strait of Hormuz, that crucial artery for Gulf oil shipments. According to Reuters, Washington and Tehran are closing in on a temporary agreement that might bring fighting to a standstill—though knotty issues like Iran’s nuclear ambitions and a complete reopening of Hormuz would still be left hanging.
After Wednesday’s sharp rally, markets paused. Sensex surged 940.73 points, or 1.22%, closing at 77,958.52—just shy of the 78,022.78 intraday peak. Nifty added 298.15 points, ending at 24,330.95, with late buying sparked by falling crude prices.
Oil-linked names jumped. InterGlobe Aviation, which runs IndiGo, surged 6.6% on Wednesday as lower fuel costs and a new airline credit lifeline tied to the West Asia turmoil gave it a lift. Trent, Asian Paints, State Bank of India, and HDFC Bank all finished higher. But Reliance Industries ended up as the Sensex’s worst hit, dropping 1.8%.
“The trigger was largely global,” said Hariprasad K, research analyst and Livelong Wealth founder, citing optimism over U.S.-Iran peace talks and softer crude prices. Ajit Mishra, senior vice-president for research at Religare Broking, linked part of the banks’ upmove to a government credit guarantee scheme aimed at businesses affected by the conflict. The Pioneer
Oil didn’t steal the whole show. According to BSE figures reported by Times of India, the last session’s surge lifted investor wealth by almost ₹6 lakh crore. Vinod Nair, research chief at Geojit Investments, called the atmosphere “risk-on,” though he noted markets remain quick to react to headlines. The Times of India
Trading on Thursday saw a patchier performance. Of the 16 main sectoral indexes, 11 finished higher, according to Reuters. Autos led the charge, boosted by Bajaj Auto’s earnings and strength in Mahindra & Mahindra and Hero MotoCorp. PSU banks and IT shares, however, lost ground following Wednesday’s gains—a sign that investors weren’t eager to pile into the rally without hesitation.
Global sentiment held up. Asian stocks tracked higher on hopes for a breakthrough between the U.S. and Iran, according to Moneycontrol. Over in the U.S., Wall Street finished strong: S&P 500 gained 1.46%, while the Nasdaq jumped 2.03%. The Dow Jones Industrial Average added 1.24%.
The tone across regional markets turned up the heat for risk. MSCI’s Asia-Pacific index, minus Japan, ran up 1.82% to another record. Japan’s Nikkei? Pushed past 62,000 for the first time ever, catching up after the holiday closure. “Momentum is going in a good direction,” Lombard Odier chief economist Samy Chaar said, pointing to lower oil prices taking the edge off bond yields. Reuters
The risk stands out: a framework doesn’t guarantee a deal. Siddhartha Khemka, who leads research for wealth management at Motilal Oswal Financial Services, called the Middle East moves “a big positive” for Indian equities. Still, he pointed out, any upside has been capped, since a deal “is still not a reality”—plus, currency pressures are still dragging on foreign inflows. Reuters
Oil markets are eyeing that same fault line. Priyanka Sachdeva at Phillip Nova pointed out crude’s been wedged for over two months, stuck between “diplomacy and disruption.” She flagged the risk: if oil infrastructure comes under attack or the Middle East situation heats up, a price spike could follow. Reuters
