Market Dynamics and Impact of Geopolitical Factors
On Tuesday, Indian equities observed a nearly 2% rise, driven by a pan-Asian rebound in risk assets. This was influenced by the US halting airstrikes on Iran, indicating a potential shift towards diplomacy in resolving the Gulf crisis. However, the absence of similar gestures from Tehran and ongoing Iranian attacks tempered optimism among traders.
Equity Market Performance
- The NSE Nifty increased by 1.8% to 22,912.40.
- The Sensex rose by 1.9% to 74,068.45.
- Both indices have seen a decline of nearly 9% since the conflict began.
Currency Market and Rupee Performance
- The rupee strengthened, closing at 93.86/$, an increase of 11 paise from the previous day.
- It reached an intraday high of 92.63/$, trading within a range of 128 paise.
Rajesh Palviya from Axis Securities noted that the market was oversold, and the halt in US attacks triggered short covering, leading to the rally. However, he cautioned that volatility might persist due to the lack of a concrete resolution.
Asian Markets
- Hong Kong and South Korea witnessed significant gains of 2.8% and 2.7%, respectively.
- China and Japan saw increases of 1.8% and 1.4%.
- Taiwan, however, experienced a decline of 0.3%.
Influence of Crude Oil Prices
Brent crude oil futures dipped by about 10% on Monday but bounced back to $98.9 on Tuesday. This was due to Iran denying talks with the US and launching new attacks. The closure of a critical waterway, essential for global energy output, limited gains in Indian equities.
Market Outlook and Key Considerations
- Dharmesh Kant from Cholamandalam Securities suggested the market could stabilize if further de-escalation occurs.
- Energy supplies and crude oil prices are crucial factors in rate and currency markets.
- Persistent equity outflows by foreign funds continue to pressure the rupee.
- Anil Bhansali from Finrex Treasury Advisors predicts the rupee to trade between 93.65 and 94.25, influenced by geopolitical developments and crude oil prices.
