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Informist, Monday, Jun. 15, 2026

 

By Anshul Choudhary

 

MUMBAI - The framework for a peace deal between the US and Iran is positive for Indian equity markets as it will clear a major overhang. However, the market may not reach the pre-war level until the final deal is signed as investors have already seen such talks between the US and Iran fail before, analysts said.

 

The Nifty 50 jumped nearly 1% Monday after both the US and Iran confirmed they had reached a framework for a peace deal, which is expected to be signed Friday in Geneva, Switzerland. The Nifty 50 closed the session at 23853.90 points, more than 5%  below the pre-war level of 25178.65 points in February-end.

 

Several analysts said investors may wait for more information about the final agreement before putting large money into equities, which suggests the pre-war levels are sometime away. Further, foreign investors are unlikely to turn net buyers simply because of the peace deal as they continue to see better growth prospects for artificial intelligence-related stocks in other countries, analysts said.

 

"What you are seeing is probably just a sentimental pushback with respect to the prices because the prices really got decimated because of the war sentiment", said Pawan Bharaddia, co-founder and chief investment officer at Equitree Capital, a portfolio management services firm based in Mumbai. "If war is now ending, probably we may see a little more upside and stocks will come back to pre-war levels."

 

Brent crude oil August futures dropped 5% to around $83 per barrel Monday, which is 17%  below the $100 per barrel level just a few weeks ago. This sharp fall in crude oil over two weeks has reduced risk of inflation moving closer to the Reserve Bank of India's upper limit of 6% and increased the possibility of the regulator revising growth estimates upwards, analysts said.

 

"The GDP growth rate and CPI inflation projections for FY27 can be revised in this changed scenario to 6.9% and 4.6%, respectively," Dr. V.K. Vijayakumar, chief investment strategist at Geojit Investments Ltd., said in a note. The RBI, earlier this month, had cut the GDP growth forecast to 6.6% from 6.9% and raised CPI inflation forecast to 5.1% from 4.6% due to high crude oil prices.

 

The sharp fall in crude oil prices has given confidence to analysts that Indian corporates will post strong earnings this financial year. Emkay Global Financial Services Monday said the Nifty 50 index companies' earnings per share is expected to rise 16% in 2026-27 (Apr-Mar). The brokerage retained its target for the Nifty 50 to reach 29000 points by March-end, indicating a rise of nearly 22% from the current level.

 

"Some residual impact (of high crude) could still flow through in Q1FY27, but there is no apparent instability in earnings momentum. With energy prices normalising, FY27 forecasts stay on course for the best year in (the last) three," the brokerage said in a note.

 

However, the brokerage's projections are at a risk of downgrades if the Strait of Hormuz does not open on Friday. There is also a possibility of downgrades depending on the time it takes Iran and other countries to rebuild the oil infrastructures damaged during the war, the brokerage said. "...beyond the immediate price action, crude prices could take six months to one year to normalise to pre-war levels given that almost 10-11 million barrels per day of production has been shut in West Asia besides which some facilities have suffered damages," said Prashant Vasisht, senior vice-president of corporate ratings at ICRA.

 

MONSOON RISKS

Monarch Networth Capital Ltd. expects the Nifty 50 to rise to 27000-28000 points in four to six months if the US-Iran sign a peace deal and monsoon turns out to be normal. "The key risk, according to me, more than oil, is the monsoon. I think India is mostly an agrarian economy and our dependence on this segment is significantly higher than the oil sector," Gaurav Bhandari, chief executive officer of Monarch Networth, said in a webinar Monday.

 

The Indian Meteorological Department has forecast a below-normal monsoon this year due to the El Nino phenomenon, which analysts said could affect crop output and lead to food prices shooting up for consumers. "The impact of a poor monsoon will be felt in agriculture and rural demand, as lower rainfall constrains crop output and weighs on farm incomes. This could, in turn, translate into broader price pressures through elevated food inflation," Care Ratings said in a report.

 

FPI FLOWS DOUBTFUL

 

Analysts do not expect foreign investors to immediately start buying Indian equities in large amounts after the US and Iran sign deal as artificial intelligence stocks in other countries such as South Korea and Taiwan continue to do well. It is also possible that foreign investors could take out money from emerging markets such as India to invest in the upcoming initial public offerings of AI giants such as Anthropic and OpenAI, analysts said.

 

Further, the concessional swap facility announced by the RBI and the capital gains exemption for debt investments by foreign investors will do more for the rupee and the debt market than for the equity market, analysts said. Unless the returns from the domestic equity market are a few basis points above the returns available through the FCNR(B), it may not make sense for foreign investors to look at Indian equities in a major way, Bharaddia said.

 

While Indian banks are offering interest rates of 5.5-7% returns of three- to five-year FCNR (B) deposits, an analysis by Motilal Oswal Financial Services showed investors can get returns of 15-26% using leverage and based on what interest rates they get for deposits. Considering this, the brokerage expects banks to collect around $50 billion through the FCNR(B) deposits under the RBI's concessional swap facility. Such a large inflow could address foreign investors' concern around weaker rupee eating into their returns and may even push some of them to put money in domestic equities, analysts said.

 

However, there are concerns that Indian banks may fail to attract the expected amount because interest rates across the globe are high and that reduces the attractiveness of a developing economy such as India.

 

Market experts such as ICICI Prudential Mutual Fund's Chief Investment Officer Sankaran Naren and Securities and Exchange Board of India's former whole-time member Ananth Narayan had raised this concern at an event last week.  End

 

US$1 = INR 94.71

 

Edited by Deepshikha Bhardwaj

 

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