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Informist, Friday, Jun. 12, 2026

 

By Arundathi A R

 

MUMBAI – Notwithstanding the sharp recovery in domestic equity markets on Friday, analysts expect the benchmark indices to remain range-bound on Monday, as doubts remain whether the peace deal between the US and Iran will be finalised over the weekend. US President Donald Trump late Thursday announced the US "just made a great settlement of the war with Iran" and said he expected a signing to occur "over the next few days." However, analysts remain sceptical of the development and expect the market to take direction from weekend developments related to the deal.

 

Analysts also see other factors influencing the market's direction going forward. "I believe inflation will slightly pick up and there will be pressure on RBI to increase rates," Pravin Bokade, head of research at IDBI Capital, said. "So overall, I see not too many triggers... for the market to go up. So, the market will remain range-bound." At 1716 IST, Brent crude oil August futures were over 3% lower at $87.29 a barrel.

 

Brokerage Motilal Oswal sees an inflow of $40 billion-$50 billion post the Reserve Bank of India's concessional dollar-rupee swap facility to encourage foreign capital flows. "We expect a surge in FCNR deposits over the coming months (mainly in Jul'26 and Onam month of Aug'26 – seasonally stronger months for FX inflows)." The brokerage expects these measures to provide temporary relief in deposit mobilisation, improve systemic liquidity and strengthen FX reserves in the near term.

 

Bokade expects inflows of $30 billion to $40 billion. He said the dollar-rupee swap facility will help arrest rupee depreciation. "But in the extent of the flow, we have to see. Because the spread between the US yield and whatever we are offering is only 1.5%. We are giving at around 6%, but the yield in the US is around 4.5%. So, how much NRIs bring in the dollars, we need to see that."

 

During the 2013 taper tantrum, the RBI used a similar forex swap window, when fears of US Fed tightening triggered capital outflows and pressured the rupee. According to Motilal Oswal, the forex swap window led to inflows of $27 billion in foreign currency non-resident dollar-denominated bank deposits and $34 billion in non-resident Indian deposits in 2013-14 (Apr-Mar).

 

Bokade said there needs to be other factors to support foreign inflows into the Indian market. "We need to report sustained earnings growth. Valuation, though it has become reasonable, our growth has also slightly narrowed down." The El Nio and the likelihood of a deficient monsoon will also exert downward pressure, he said.

 

"FIIs have been on a selling spree in recent months, and these measures, alongside a reduction in tax rates on capital gains in debt securities, will help arrest currency depreciation and aid FX reserves," Motilal Oswal said. "We thus expect a near-term strengthening in the USD-INR rate to 93-94 levels." Bokade also expects the rupee to stabilise around 93-94 per dollar.

 

The Indian rupee settled at a one-week high of 95.1100 a dollar Friday as Brent crude oil prices tumbled. "Going ahead, the weekend news flow will be crucial. If there are no adverse developments regarding geopolitical negotiations, the rupee could attempt to break the important 94.80 resistance zone, which remains a key technical level on a closing basis," Jateen Trivedi, commodity and currency research analyst at LKP Securities, said in a note.

 

Motilal Oswal sees strong business growth, robust asset quality, and a stable currency outlook to ease FII selling pressure.

 

Data released Friday showed that India's annual inflation, as measured by the Consumer Price Index, rose to a 16-month high of 3.93% in May, up from 3.48% in April. "The uptick was entirely driven by the food and beverages, transport, restaurants, and personal care divisions, with the latter three reflecting the impact of the hike in prices of petrol and diesel, commercial LPG cylinders, and customs duty on gold and silver in the month," Rahul Agrawal, principal economist at ICRA, said in a note.

 

The recent redemptions from global emerging market funds suggest the allocation towards artificial intelligence infrastructure and commodities is losing momentum for the first time in over a year, Sunil Jain, vice-president at Elara Securities, said in a report Friday. Foreign investors have pulled out $10 billion from Taiwan and South Korea, major beneficiaries of AI trade, in the last six weeks, according to the report.

 

On Friday, the Nifty 50 rose 2% higher to 23622.90. The 50-stock index ended the week up over 1%. The BSE Sensex closed 2.3% higher at 75527.95. "Better to wait for the weekend or maybe from next week we can see some kind of momentum or maybe directional move in the market," Osho Krishan, senior research analyst at Angel One, said. Analysts expect the Nifty 50 to face resistance at 23750–23820 levels and find support at 23500–23450 levels.  End

 

US$1 = INR 95.11

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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