Indian markets rebound sharply after US-brokered ceasefire eases tensions

Upward momentum

In the morning session, the Nifty 50 was trading at 25,239.05, up 267 points or 1.07 per cent, while the BSE Sensex rose 914 points to reach 82,810.81, marking a gain of 1.12 per cent.

The rally was led by Adani Ports, which gained 4.16 per cent, while NTPC emerged as the biggest loser with a 2.80 per cent drop. Among the sectoral indices, PSU banks led the pack with a 1.83 per cent rise, while pharma stocks lagged with a modest 0.40 per cent gain.

Also read: Sensex, Nifty rebound as Middle East tensions ease

Analysts suggest this upward momentum may continue in the near term, although geopolitical uncertainties remain a key risk.

Asian markets

Across Asia, markets echoed the optimism.

Japan’s Nikkei 225 climbed 415.03 points in early trade, supported by gains in the broader Topix index. In Hong Kong, the Hang Seng Index jumped 1.5 per cent to 24,050.54, its biggest single-day rise since June 9. The Hang Seng Tech Index rose 1.8 per cent, while China’s CSI 300 added 1 per cent.

South Korea’s Kospi surged nearly 3 per cent, leading regional advances. The MSCI Asia Pacific Index gained as much as 1.8 per cent, the sharpest increase since May 2.

These gains reflect a dramatic turnaround in sentiment after several days of volatility driven by fears of wider conflict in the Middle East. Investors rotated out of oil and defense stocks and returned to growth and tech counters, particularly in Asia, as tensions appeared to de-escalate.

Also read: Iran-Israel conflict: Strait of Hormuz, if shut, could send fuel prices in India soaring

How European markets fared

European markets, however, had closed lower on Monday, still digesting the weekend’s geopolitical drama. The Stoxx 600 index slipped 0.28 per cent to 535.03, its lowest level in over a month. Germany’s DAX fell 0.3 per cent, France’s CAC 40 declined by 0.7 per cent, and the UK’s FTSE 100 shed 0.2 per cent.

Spain’s market ended the day flat. European investors moved toward defensive sectors such as utilities while oil and gas shares continued to ride earlier price spikes.

It is possible European markets are still concerned as Europe will be far more dependent on oil from the US; if supply from Iran stops - than its Asian counterparts like China and India; that can still depend on Russia.

US markets close on a high

In contrast, US markets closed on a high note. The Dow Jones Industrial Average added 375 points, a rise of 0.89 per cent. The S&P 500 increased 0.96 per cent to close at 6,025.17, snapping a three-day losing streak.

The tech-heavy Nasdaq Composite gained 0.94 per cent to finish at 19,630.97. Volatility subsided as the CBOE VIX index dropped nearly 7 per cent to 20.62.

For now, the ceasefire has brought a temporary reprieve and a rally across risk assets, but analysts remain watchful

While energy stocks led the early gains, the retreat in oil prices shifted the spotlight back to growth and technology shares by the end of trading. In commodities, Brent crude saw a steep decline of over 7 per cent overnight and was trading near $66.21 per barrel in Asia, its lowest in more than a week. The easing of conflict-related supply concerns has taken the pressure off oil prices.

Also read: Sensex, Nifty tumble in early trade amid worsening tensions in Middle East

Gold also fell to a near two-week low as demand for safe-haven assets diminished. On the currency front, the US dollar weakened, while the yen and euro both strengthened as risk appetite returned to global markets.

Indian stock market

Commenting on the domestic performance, Devarsh Vakil, head of Prime Research at HDFC Securities, observed, “The Indian stock market demonstrated remarkable resilience last week, despite global uncertainties and mixed domestic sentiment.”

Vakil expected further volatility but noted that the Nifty faces resistance at 25,222 and has support around 24,800. Adding to that perspective, Prashanth Tapse of Mehta Equities said, “The entry of the US in the Israel-Iran conflict heightened tension as panic selling by investors triggered major corrections in early trades... However, FIIs turning out buyers of local shares worth just under Rs 10,000 crore in the past four sessions shows that India's strong fundamentals continue to attract foreigners despite global uncertainty.”

Prathamesh Mallya of Angel One sounded a note of caution. “This escalation of conflict has put Strait of Hormuz at risk... It puts around 20 per cent of the global oil transit from this route at risk which in turn might lead to volatile crude oil prices which could push oil prices to even $120-130/bbl. This puts global inflation risk (rising) to the centrestage which might delay the rate cuts of Central banks globally and lead investors to move their asset to safe havens (gold and silver) and withdraw from volatile equity markets.”

For now, the ceasefire has brought a temporary reprieve and a rally across risk assets, but analysts remain watchful.

As Devarsh Vakil summed it up, “Markets are navigating these developments reasonably well, with major indices avoiding significant damage. However, we cannot discount the possibility of unpredictable contagion effects across global markets if hostilities continue to escalate.”