Indian equity benchmarks staged a smart comeback on Friday, breaking a three-day losing streak, as investors got a sense of relief with declining geopolitical tensions between Israel and Iran. With this, both the Nifty 50 and the Sensex hit new highs, with the Nifty crossing the psychologically important 25,000 level in intra-day trade and signaling a stronger risk-taking ability among market participants.
At 12:25 PM IST, the Nifty 50 was trading at 25,018.80, up sharply by more than 225 points or about 0.9% from its close on Thursday at 24,793.25. In the same vein, the BSE Sensex surged, gaining more than 700 points to hover around 82,101.07 as against its Thursday close of 81,361.87. The broader markets joined in the rally too, with the Nifty MidCap index and the Nifty SmallCap index gaining 0.84% and 0.74% respectively. India VIX, the market’s volatility index, was subdued by almost 4%, indicating lower market fear. That positive momentum was mostly due to reports pointing to a possible de-escalation of the ongoing conflict in the Middle East spilling into the region, including reassurances from the US that talks with Iran are still possible and a decision on US support for Israel would come within two weeks. This calmed the nervous sentiment that had engulfed international markets after news of escalation in military actions earlier in the week.
Oil prices – the most important factor for import-reliant India – fell sharply, with Brent crude down more than 2% to around $76.9 per barrel, giving a further shot in the arm to market sentiment. Sectoral Performance & Top Movers The broad-based rally witnessed nearly all sectoral indices trading in the positive, with Nifty PSU Bank and Nifty Realty further lifting the sentiment, both rising more than 1%. The Financial Services and Metal indices saw strong advances. Among the Nifty 50 gainers, prominent names included Mahindra & Mahindra, Eternal (Zomato’s parent entity), State Bank of India, UltraTech Cement, Bajaj Finserv, and Maruti Suzuki India. All three of these heavyweights went a long way in pushing the indices higher. Surprisingly, Eternal Ltd. (Zomato) has held its break run, a manifestation of investor trust in its multi-brand system.
A handful of penny stocks staying down included IndusInd Bank, Bajaj Finance, Tech Mahindra, and Kotak Mahindra Bank even as the overall market rallied. International Cues and Macro Indicators Asian markets gave a mixed but overall positive picture today. While Japan’s Nikkei recorded a minor loss, China’s CSI 300 and Hong Kong’s Hang Seng returned a profit, bolstered by China’s move to hold major lending rates in place. European equities, which fell in the previous session on Middle East worries, were starting to stabilize. With US markets closed yesterday for Juneteenth, therefore making for a more cautious futures trading earlier today, the easing of fears on the geopolitical front proved to help provide the day’s tailwind.
On the external front as well, the Indian Rupee performed quite impressively, seeing an appreciation of 9-13 paise against the US dollar on different days. It opened at about **₹86.64/$ after closing at ₹86.73 the day before, bouncing back from a three-day drop. This recovery was further supported by the drop in crude oil prices alongside a weaker US Dollar Index. Market analysts expect the Rupee to trade at around ₹86.35-₹86.95 in the short term and further appreciation if geopolitical calm returns.
The Reserve Bank of India (RBI) is apparently intervening to contain volatility. FIIs remained on the buying side for a fifth consecutive day, pouring a net ₹934.62 crore into Indian stocks on Thursday. Domestic Institutional Investors (DIIs) were active buyers on the domestic bourses, with net purchases of ₹605.97 crore, their 23rd straight day of net buying. This continued national encouragement has been key in protecting the market from external shocks and global unknowns.
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Outlook Market prognosticators think that though immediate sentiment has become positive, driven by the dramatic geopolitical de-escalation and supportive institutional flows, caution is still warranted. The Nifty’s near-term resistance lies at 25,050 with crucial support at 24,700-24,600 band. Next, the entire investor focus will shift back to corporate earnings, domestic economic data, and the path of global inflation. The phase Sensex rebalancing, where Trent and BEL will be entering the benchmark on June 24, is creating passive fund flows today. As the day moves on, investors will sharply watch all global developments closely. At least for now, Dalal Street has heaved a huge sigh of relief.
