GIFT Nifty Signals Cautious Start as Markets Assess Geopolitical Calm vs. Federal Reserve's Hawkish Stance

GIFT Nifty Signals Cautious Start as Markets Assess Geopolitical Calm vs. Federal Reserve's Hawkish Stance​

Indian benchmark indices are set for a measured start on Thursday, with market participants balancing conflicting global cues. The positivity generated by easing geopolitical tensions and sharply lower crude oil prices must now be weighed against the cautionary signals emanating from the US Federal Reserve. This balance forms the core of investor sentiment ahead of continued domestic trading.

GIFT Nifty futures trading at 24,055 (down 45 points or 0.2 percent) provided a muted outlook for the day's opening. This contrasts sharply with Wednesday’s strong performance where both benchmark indices saw significant gains. The Sensex rose 347.14 points and Nifty climbed 96.55 points, continuing their rally driven by falling oil prices and improved sentiment regarding geopolitical risks.

Global Markets React to US-Iran Interim Deal​

International markets displayed a mixed response following the signing of an interim peace agreement between the U.S. and Iranian officials. This deal is set to extend the ceasefire between the two nations, which is anticipated to facilitate the reopening of the Strait of Hormuz while permanent settlement negotiations continue.

Asian markets traded mostly flat as investors processed the implications of this diplomatic breakthrough. In contrast, global commodity sentiment received a major boost from oil prices. Brent crude fell another 1.4 percent to approximately $78.4 per barrel. This drop follows the signing of the U.S.-Iran agreement, which included waiving sanctions on Iranian oil exports.

Federal Reserve Signals Future Rate Hikes Amid Market Rally​

Wall Street saw declines overnight after the Federal Reserve maintained its interest rates but issued a forward-looking warning. The Dow Jones Industrial Average dropped 0.98 percent, while the S&P 500 and Nasdaq Composite fell by 1.21 percent and 1.34 percent, respectively.

The Fed held rates unchanged within the 3.50-3.75 percent range, aligning with expectations. However, updated projections indicate that several policymakers still anticipate at least one rate increase before the end of 2026. New Fed Chair Kevin Warsh emphasized maintaining a keen focus on inflation moving forward.

Oil Price Slide Provides Major Tailwind for Indian Equities​

The sharp decline in crude prices continues to serve as a significant tailwind for Indian markets over the last week. The falling oil costs alleviate concerns regarding inflation, corporate input expenses and the country's current account deficit.

This benefit has translated into strong domestic momentum. Over the past four trading sessions, both the Nifty and Sensex have gained roughly 4 percent and 4.5 percent, respectively. The fall in crude prices is particularly constructive as it provides meaningful relief to India’s inflation outlook and broader macroeconomic stability, according to experts.

Expert View: Cautious Optimism Sustains Domestic Bias​

Ponmudi R, CEO of Enrich Money, maintains that Indian markets are likely to retain a cautiously positive bias despite the hawkish elements from US financial institutions. He noted that investor sentiment has strengthened following the White House confirmation of the Peace Deal Memorandum signed by U.S. President Donald Trump.

Mr. Ponmudi added that Brent crude stabilizing in the $74-$76 per barrel range continues to support India's macroeconomic environment and import bill stability. On a technical note, the Nifty maintains a positive structure above the critical 24,000 mark. Immediate resistance is projected in the 24,100-24,200 zone, with strong support holding at 23,900 and 24,000.

Institutional Flows Show Domestic Buying Strength​

Institutional investment flows displayed a degree of differentiation between foreign and domestic investors on June 17. Foreign institutional investors purchased equities worth more than Rs 100 crore. Meanwhile, domestic institutional investors acted as net buyers, logging purchases valued at Rs 1,561 crore.