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Informist, Tuesday, Jun. 16, 2026

 

By Arya S. Biju

 

MUMBAI – The domestic equity market may continue its upward trend Wednesday as sentiment has turned positive after the US and Iran reached a preliminary agreement to end the nearly four-month-long war in West Asia and reopen the Strait of Hormuz. While a largely stable rupee and Brent crude oil hovering around $81 per barrel is seen supporting the positive momentum, persistent worries about details of the potential peace deal and its durability are seen limiting the upside, analysts said.

 

The progress towards a US-Iran peace agreement, scheduled to be signed in Switzerland Friday, along with expectations of the Strait of Hormuz being reopened, has significantly improved global risk sentiment, analysts said. Further, falling crude oil prices and a stable currency are seen easing concerns around inflation and external sector stability, they said. However, for a meaningful macroeconomic reset, crude oil prices may need to stay down for several weeks and freight premiums also need to cool, they said. 

 

Analysts expect crude oil prices to fall further once the final agreement between the US and Iran is signed and the Strait of Hormuz is confirmed safe for tanker movement, leading to gradual normalisation of supply flows. However, the decline in prices may be limited as countries that used their strategic petroleum reserves and inventories during the conflict are likely to begin replenishing stocks, which could support crude oil prices, Swarnendu Bhushan, research analyst covering the sector at PL Capital, said in a note. 

 

A rapid normalisation in global oil and gas supply and shipping may ease India's macroeconomic pressures, especially if crude oil prices fall below the base-case scenario of $95 per barrel for FY27, Kotak Institutional Equities said in a report dated Monday. Lower current account deficit pressure due to a fall in oil and gas prices, coupled with likely inflows through the Reserve Bank of India's Foreign Currency Non-Resident (Bank) swap facility, may ease the pressure on India's balance of payments and fiscal position, the brokerage said. However, forecasts of a poor monsoon may continue to weigh negatively on India's growth and inflation dynamics, it added.

 

There are expectations that the selling of domestic equities by foreign investors may slow down in the current macroeconomic environment supported by government measures. However, a meaningful return of foreign investors to the Indian market will need a recovery in earnings, improvement in growth outlook, and valuation comfort. Renewed strength in the artificial intelligence trade and the momentum in markets like South Korea and Taiwan are also likely to keep foreign investors away from India for some time, analysts said. 
 

Meanwhile, concerns about the durability of the US-Iran deal and Israel's reactions persist. Israel's Prime Minister Benjamin Netanyahu has said his country's troops will continue to occupy southern Lebanon despite the US-Iran agreement, Al Jazeera reported. Meanwhile, Iran has warned that any Israeli attack on Lebanon or continued occupation of its territory from now will constitute a violation of the interim agreement with the US, as per the report.

 

While the positive sentiment in the market is likely to continue, analysts do not expect the frontline indices to move above their pre-Iran war levels soon. "It (indices breaching the pre-war levels) cannot be immediately because a lot of damage has happened in terms of an increase in oil prices and everything," Anita Gandhi, head of institutional equities at Arihant Capital Markets, said. "So it can happen, however it will take some time. It depends on exactly how the (US-Iran) deal goes, what kind of agreement happens."

 

Going forward, investor sentiment remains measured ahead of the upcoming US Federal Reserve policy meeting, the first under newly appointed Chair Kevin Warsh. While the Fed is widely expected to hold the benchmark interest rate steady, market participants will pay close attention to the forward guidance and commentary on the trajectory of monetary policy, Siddhartha Khemka, head of research, wealth management, at Motilal Oswal Financial Services, said in a note. 

 

Tuesday, the Nifty 50 index closed at 23989.15, up 135.25 points or 0.6%. The BSE Sensex settled at 76808.48, up 544.15 points or 0.7% from the previous close. "We maintain our view that the index could potentially retest the 24200–24500 zone in the near term, while the 23650–23800 region is likely to act as an important support area," Sudeep Shah, head of technical and derivatives research at SBI Securities, said in a note. "With participation broadening across sectors, we recommend favouring relative out performers while also booking profits on rallies until there is clearer confirmation of a sustained trend reversal."  End

 

US$1 = INR 94.5600

 

Edited by Rajeev Pai

 

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