Indian stock market recovered all morning losses, with Sensex rebounding nearly 790 points and Nifty jumping over 260 points from their respective intraday lows to close in the green as oil prices cooled down below $110 per barrel, and bond yields inched lower after soaring to record high levels.At close, Sensex was up over 117 points at 75,318 while Nifty 50 was up 41 points at 23,659. This came as India VIX, which measures volatility in markets, declined around 2% to 18.31 in the afternoon.The sharp reversal in investor sentiment was broad-based, with Nifty Smallcap 100 and Nifty Midcap 100 indices gaining around 0.6% and 0.07% respectively. Sectorally, Nifty Oil & Gas gained around 1.7% to lead gains, while Nifty Media fell over 1% to lead losses. Around 1,722 stocks advanced on NSE, while 1,543 stocks declined and 107 remained unchanged."Markets recovered from intraday lows, supported by selective buying in largecap stocks across autos, financials, and oil & gas. Autos and financials gained on relatively better Q4 earnings, while recent fuel price hikes supported sentiment for OMCs and refiners. Realty stocks also witnessed value buying after the recent correction,” said Vinod Nair, Head of Research at Geojit Investments.Bond yields inch lowerAfter a skyrocketing rally to record high levels, bond yields slightly declined. The benchmark 10-year U.S. Treasury yield hit a 16-month high of 4.687% overnight, while the 30-year yield climbed to 5.198%, levels last seen in 2007. Both have since eased slightly to 4.65% and 5.17% respectively. While the bond yields have slightly cooled down on Wednesday morning, the yields remain elevated.High bond yields typically make bonds attractive to investors, which in turn can lead to some downturn in equity markets.Iran-US conflictUS President Donald Trump told lawmakers at the White House that the country will “end the war very quickly” with Iran. "There's so much oil out there, they're going to come plummeting down..We're going to end that war very quickly. They want to make a deal so badly...You are going to see oil prices plummet. They're going to come down. There's so much oil out there, they're going to come plummeting down," he said at a press conference. This came after he threatened Iran, saying the US may launch new attacks if Tehran fails to agree to some of the terms of the peace deal.Meanwhile, US Vice President JD Vance said that the Iran conflict will not become a “forever war”. “We're going to take care of business and ⁠come home,” he said during a White House briefing.Oil prices fall below $110/barrelAs a result, oil prices cooled down. Brent crude fell nearly 2% to close at a little over $109 per barrel. WTI Crude also fell around 2% to $102 per barrel. Oil prices, however, continue to remain above the $100 per barrel level amid the prolonged blockade over the Strait of Hormuz, a narrow 33-kilometre waterway connecting the Persian Gulf with the Gulf of Oman that handles over 20% of the world’s daily oil and gas shipments.Global marketsAsian markets mostly closed in the red, with Japan’s Nikkei and South Korea’s Kospi dropping around 1% each. Hong Kong’s Hang Seng fell 0.7% while China’s Shanghai Composite recorded marginal losses.European markets moved into the green with the UK’s FTSE, France’s CAC and Germany’s DAX recording marginal gains. Wall Street closed in the deep red yesterday, but Dow Jones futures are currently in the green, indicating a positive start for the American stock market later today.Rupee hits fresh record lowDespite the optimism, some caution is warranted. Indian rupee extended is free fall, ending at a record closing low of 96.82 against the US dollar. Rupee’s weakness comes as elevated crude oil prices and continued pressure on capital flows kept the currency under stress, said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities. “Sustained higher crude prices are increasing concerns over India’s import bill and widening trade deficit, which is keeping sentiment weak for the rupee,” he said.“Market participants continue to prefer dollar buying and rupee selling as a hedge against ongoing volatility and external sector pressure. The broader trend remains weak, with the rupee expected to trade in a range of 96.25–97.00 in the near term,” according to the analyst.FII selling resumesForeign investors remained net sellers of Indian equities on Tuesday, selling shares worth Rs 2,457 crore on Dalal Street. This comes after a three-session buying streak during which FII bought Indian shares worth Rs 5,240 crore. However, foreign investors have mostly remained bearish on Indian markets this month so far, remaining net sellers of Indian equities in eight out of 12 sessions so far in May.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times.)