Mumbai: Indian equities extended gains on Monday, with benchmark indices rising 1% after climbing as much as 1.7% during the session, as hopes of a peace deal between the US and Iran prompted traders to pare bearish bets, while easing crude oil prices lifted sentiment.While the durability of the rally will depend on the finalisation of a deal, analysts said downside risks appear limited for now.The NSE Nifty 50 gained 231 points, or 1%, to close at 23,853.90, after briefly crossing the 24,000 mark for the first time since May 29. The S&P BSE Sensex advanced 736.38 points, or 1%, to end at 76,264.33. Over the past two sessions, both indices have rallied as much as 3.3%.Agenciesfingers crossed over peace Sensex and Nifty rally 3.3% in past two sessions on short covering; ₹200 cr FPI inflow on Mon"The rally on Monday and Friday was driven by short covering on hopes of a peace deal between the US and Iran, and while the sustainability of gains is not certain, the deal seems to be around the corner," said Nilesh Jain, VP-Head of Technical and Derivative Research, Centrum Finverse.The US and Iran said they have reached a new ceasefire agreement that will end a US blockade of Iranian ports and reopen the Strait of Hormuz, ending the months-long conflict that has kept investors on tenterhooks and kept oil prices elevated.With both sides showing willingness to bring the war to an end, Brent crude futures fell more than 5% to $85.8 a barrel on Monday. Across Asia, South Korea, Japan surged 5.2% and 5%, respectively, while Taiwan gained 2.8%. China and Hong Kong rose 1.6% and 0.5%."The reaction in oil prices after the peace deal was announced reassured investors that crude prices are not expected to sustain at elevated levels for longer and triggered a rally," said Vaiibhavv Chugh, chief executive officer, Abakkus Mutual Fund. "The fear has toned down considerably, and optimism could build further," he added.Realty stocks led the gains, with the Nifty Realty index surging 4%. The Nifty Consumer Durables and Auto indices climbed 2.9% and 2.6%, respectively.Foreign portfolio investors bought shares worth a net ₹200 crore on Monday - after 11 consecutive sessions of selling, while domestic institutional investors bought shares worth ₹3,189.3 crore. So far in June, foreign investors have sold shares worth ₹41,967 crore."Foreign investors have pared some of their short positions, which contributed to the rally. However, towards the latter part of the session, participants booked some profits in the derivatives market," said Abhilash Pagaria, Head of Alternative & Quantitative Research at Nuvama Wealth. If the deal is finalised, a significant source of uncertainty could be removed, potentially encouraging foreign investors to increase allocations to Indian equities, he said.The India VIX volatility index fell 2.5% to 14.4. After spiking to around 29 at the height of the conflict, the gauge has retreated to more comfortable levels, suggesting investor anxiety has eased. "For the gains to be sustainable, Nifty must decisively close above 24,000," said Jain.He said intermittent declines could not be ruled out, but the Nifty could gradually move towards 24,500 during the June series if it breaks above the 24,000 mark.Broader markets outperformed the benchmarks, with the Nifty Midcap 150 and Nifty Smallcap 250 rising 1.5% and 1.3%, respectively. Over the past week, the two indices have gained 1% and 3%.