Banking shares led the market rally on Wednesday, with the Nifty Bank surging over 1,653 points, or 2.76 percent to cross the 61,350 mark as easing crude oil prices improved investor sentiment towards domestic equities.
The strong buying in banking and financial stocks came as benchmark indices climbed to an eight-month high, supported by strong foreign fund inflows after a prolonged two-year period of outflows. Easing crude prices have also helped ease concerns over pressure on the rupee, a key consideration for overseas investors.
The Nifty Bank hit a high of 61,394.30, leaving the index nearly 350 points away from its all-time high.
Brent crude futures fell to a two-month low of $89.16 per barrel in the previous session after US officials played down the possibility of further military action against Iran, easing concerns over potential supply disruptions.
Lower crude oil prices are seen as positive for the Indian economy, given the country's dependence on oil imports. A moderation in crude prices can help contain inflation, ease pressure on the current account and support the rupee. It can also provide the Reserve Bank of India with greater room to consider monetary easing, although the impact on interest rates and bank stocks would depend on the broader inflation and growth outlook.