Mumbai: Indian equities rose more than 1% Monday, with the Nifty posting its strongest single-day gains since April 1, as optimism over a potential US-Iran agreement to reopen the Strait of Hormuz caused oil prices to slide below $100 a barrel. The rupee, too, climbed for the third straight session, while bond yields slid closer to 7%.

The NSE Nifty 50 advanced 1.3%, or 312.40 points, to close at 24,031.70, reclaiming the 24,000 mark after about two weeks, while the S&P BSE Sensex climbed 1.4%, or 1,073.61 points, to 76,488.96.

Sentiment was buoyed after reports the US and Iran were nearing an agreement that could ease tensions and restore energy flows. US President Donald Trump said over the weekend that both sides had largely negotiated a memorandum of understanding, according to Reuters.

Brent crude declined more than 5% to around $98 a barrel, easing concerns over inflation.

Asian markets rallied in tandem, with Taiwan gaining 3.3%, Japan 2.9%, and China 1%, while Hong Kong and South Korea were shut.

"With every day of delayed truce, there is a chance that the inflation can be higher, so the earlier we have a solution, the better," said George Thomas, equity fund manager, Quantum AMC.

Lower Risk Outlook

"Even if there was to be a resolution immediately, it would take some time for things to normalise," said Thomas of Quantum. "While a resolution may not be immediate, incrementally, things will be positive."

Volatility eased, with the India VIX declining 6.7% to 16.7, signalling that risk expectations are easing. The rupee climbed to 95.23 per dollar Monday, its highest in more than two weeks, versus its previous close of 95.69. Benchmark 10-year bond yields fell to 7.025% Monday, from 7.088% Friday, according to investing.com data. Technically, the rally was aided by short covering, with the index breaking key levels. "Nifty witnessed a decisive breakout and closed strong- driven by short covering," said Rajesh Palviya, Head of Research, Axis Securities. "Call writers are on the backfoot and if Nifty sustains over 24,000 levels, gains of 200-300 points are expected on an immediate basis."

Palviya said further gains toward 24,800 levels could materialise if positive triggers emerge on the geopolitical or domestic front. Sectorally, the gains were broad-based, with financial stocks leading the rally as improving macro sentiment supported the space. The Bank Nifty and Nifty Financial Services indices rose 2.3% and 2.2%, respectively, while PSU banks gained 2.9% and private banks 2.1%. Auto and realty indices also advanced. "Banking stocks are available at decadal low valuation which is lending comfort to investors," said Thomas. "But if this crisis prolongs for a longer time, then there could be an impact on credit cost."