India's key equity indices surged over 2% on Friday, the most in two months, as the decline in oil prices amid fresh hopes of a peace deal between the US and Iran eased nervous investor sentiment. Brent crude fell over 5% on Friday, falling below $90 a barrel for first time in three months, triggering a rally across equities in the region.The NSE Nifty rose 461 points or 2% to close at 23,622.9 and the BSE Sensex rose 1,695 points or 2.3% to end at 75,527.95. Both indices, which posted their highest single-day gains in more than two months since April 8, rose as much as 1.7% in the week, reversing two weeks of losses. ET BureauElsewhere in Asia, Japan gained 2.8%, China advanced 1.1%, Hong Kong rose 1.9%, South Korea gained 4.6% and Taiwan moved up 2.4%. The pan-Europe index Stoxx 600 was 1.2% higher at press time."Friday's market rally was driven by optimism around a potential resolution to the West Asia conflict, which led to a sharp decline in crude oil prices," said Shrikant Chouhan, head of equity research, Kotak Securities.August Brent crude oil futures were trading at $88.3 per barrel on Friday evening, down 2.4% over the previous day.VIX Falls Global sentiment improved after Donald Trump said on Thursday that a deal to end the West Asia conflict and reopen the Strait of Hormuz could be signed as early as this weekend, raising hopes of supply disruptions being eased. However, Iran maintained that no final decision had been taken, tempering optimism over an imminent breakthrough.India's volatility index or VIX, the fear gauge, fell 5.7% to 14.72 levels, indicating traders' risk perception has eased. The volatility index has dropped 13.3% in the past five sessions."If at all the war sees an end, then a fall in crude oil prices, supply chain restoration would give a good breathing space to Indian equities," said Sham Chandak, head of institutional equities at Elios Financial Services. "FCNR (foreign currency non-resident) deposits picking up and India's potential inclusion in the Bloomberg Bond Index can also bring back much-needed stability in forex."Foreign portfolio investors net sold shares worth Rs 1,082 crore. Domestic institutions were buyers to the tune of Rs 5,341 crore.On Friday, the broader market indices outperformed the benchmark, as the Nifty Midcap 150 gained 2.4% and the Nifty Small-cap 250 rose 2.6%. Out of the total 4,422 stocks traded on the BSE, 3,155 advanced and 1,119 declined at close.Dharmesh Shah, head of technical research at ICICI Securities, said the Nifty 50 has decisively closed above its 20-day moving average of 23,500 after facing resistance at this level multiple times, signalling improved market sentiment."Optimism around a potential US-Iran deal has eased crude oil prices, which could benefit oil marketing, aviation, paint and auto stocks going ahead," he said. "Technically, Nifty may advance towards 24,300 in the coming weeks, while key support is seen at 23,100."Chouhan of Kotak Securities said that the reopening of the Strait of Hormuz will be crucial and if it happens, oil could slip below $80 a barrel levels. He also said the Nifty may face immediate resistance around 24,000 if it sustains above 23,500 levels.