Gift Nifty points a strong start for Indian markets on Wednesday, thanks to favourable global cues. Comments from the US President Donald Trump suggesting the possibility of negotiations between the United States and Iran lifted sentiment across global markets.
Gift Nifty is ruling at 23,170 (7:15 am IST), indicating a gap-up opening of about 100 points. Trump said negotiations to end the Iran war are happening “now” and the “people” the US are speaking to “want to make a deal so badly”.
Global cues lift sentiment, but uncertainty lingers
Hariprasad K, SEBI-registered Research Analyst and Founder of Livelong Wealth, notes that this potential for diplomatic engagement has provided some relief to global investors, raising hopes of a de-escalation of Middle East tensions. “Crude oil prices have slipped below the $100 per barrel mark, reflecting sustained market optimism around the prospects of a diplomatic breakthrough,” he said, adding that “However, conflicting signals from Iran, which has denied any formal talks, suggest that the situation remains fluid, potentially limiting the durability of this optimism.”
Volatility eases, but remains elevated
On the domestic front, volatility has shown early signs of cooling, with the India VIX easing below 25. “However, the decline remains modest, and volatility continues to stay elevated relative to recent trends. A meaningful drop in VIX would require stronger directional conviction in the market. Until then, option premiums are expected to remain elevated, making risk-reward unfavourable for option sellers in the absence of a clear trend,” he cautioned.
FII flows remain key overhang
Foreign Institutional Investor activity continues to be a key overhang for the market, with persistent selling driven by global uncertainty, currency fluctuations, and shifting risk appetite, said Ponmudi R, CEO of Enrich Money. The sustainability of the current recovery will largely depend on moderating these outflows. Until then, any upward movement in the market is likely to remain cautious and volatile, with sentiment reacting quickly to global developments, particularly around crude oil, geopolitical tensions, and currency movements.
Recovery broad-based, but risks persist
Ajit Mishra – SVP, Research, Religare Broking Ltd, said sectoral participation was broadly positive, reflecting a strong recovery across the board. Sentiment improved significantly after reports of easing tensions between the US and Iran, including a proposed five-day ceasefire, which helped cool crude oil prices from elevated levels. This development reduced concerns around inflation and global economic stability, triggering short covering and fresh buying in equities. However, despite the recovery, crude oil remains elevated near $100, and persistent FII outflows continue to cap overall optimism, he said.