New Delhi, March 5 -- India's stock markets staged a smart recovery on Thursday after falling in the previous two sessions, helped by short covering and bargain buying in beaten-down shares, as sentiment improved on reports that the West Asia conflict could ease.

The benchmark Nifty50 index recovered close to half of its recent losses in the last hour on Thursday, as reports emerged that Iran had reached out to the US for talks to end the war, improving risk appetite. The news coincided with the weekly expiry of Sensex options on Thursday, which also forced the traders to square off their positions in panic.

The US and Israel launched joint strikes on Iran on Saturday that killed its supreme leader Ayatollah Ali Khamenei, triggering ret...