Stock markets are expected to start Wednesday on a strong note, taking cues from global markets and easing oil prices as hopes rise for fresh talks between the United States and Iran.
Early signals suggest a positive opening. GIFT Nifty futures were trading at 24,228 at 7:34 am. This points to the Nifty 50 opening around 1.6% higher than its last close of 23,842.65 on Monday. Domestic markets were shut on Tuesday due to a public holiday.
Markets across Asia moved higher, with the broader Asian index gaining 1.7%. Wall Street also ended in the green overnight after US President Donald Trump said that talks with Iran could resume in Pakistan over the next two days. These talks had broken down last weekend.
There were also signs from both Pakistani and Iranian officials that negotiations may restart. This pushed Brent crude prices lower, with oil falling below $100 per barrel. Lower oil prices are usually seen as positive for India, as the country imports a large share of its crude oil needs.
The fall in oil prices has helped improve investor mood, as it reduces pressure on inflation and the overall economy.
MARKETS HIT BY WAR-LED UNCERTAINTY
Both the Nifty 50 and Sensex have been under pressure since the start of the conflict on February 28. The two indices have fallen about 5.3% each during this period.
The main concern has been rising oil prices and fears of supply disruption. These factors have affected the economic outlook and earnings expectations for India, which is the world’s third-largest importer of crude oil.
Foreign investors have also pulled money out of Indian markets during this time. Foreign portfolio investors have sold shares worth $17.71 billion since the conflict began. In March alone, outflows touched a record $12.72 billion.
INFLATION AND OTHER RISKS REMAIN
On the domestic front, data released after market hours on Monday showed that India’s retail inflation rose slightly in March. There are concerns that a long-drawn conflict in the Middle East, along with weaker monsoon rains, could push up prices further in the coming months.
Higher inflation can impact both consumer spending and company earnings, which in turn affects stock markets.
Despite these risks, markets seem to be focusing more on the possibility of renewed talks between the US and Iran.
According to analysts, investors are currently betting on stability rather than further escalation. The drop in oil prices and signals of diplomatic engagement have helped improve sentiment in the short term.
For now, the direction of the market will largely depend on how the situation between the US and Iran develops, along with movements in oil prices and foreign investor activity.
