Indian markets are likely to start on a positive note on Wednesday, the first day of trading in FY27. Amid signals of de-escalation from both the US and Iran, analysts expect the momentum to sustain through out the day. However, with the market being closed on Friday, profit taking is also not ruled out for select counters, they added.
Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth, Indian equities are set to begin the new fiscal year on a strong note, with Gift Nifty signalling a sharp gap-up opening. The momentum is largely being driven by a decisive improvement in global risk sentiment, following encouraging signals around potential de-escalation in the ongoing West Asia conflict.
Global markets rallied strongly, with the Dow Jones surging over 1,100 points, as reports indicated that Iranian leadership may be open to ending hostilities, subject to certain assurances.
“While these developments remain unconfirmed, they have significantly shifted market sentiment from risk aversion to cautious optimism. Further support has come from comments by US President Donald Trump suggesting that the conflict could see resolution in the coming weeks, with a broader diplomatic framework likely to emerge,” he added.
Elara Securities in a note said one-year forward P/E relative to its rolling 10-year average. At 17.3x, Nifty trades 7 per cent below its 10-year average of around 18.6x, placing it in a historical “bounce zone”. Outside of extreme disruptions like Covid-19, this level usually acted as a floor for valuation. “Even during the Russia–Ukraine conflict, despite Brent sustaining above USD 100/bbl, Nifty multiples bounced back from 10-year rolling averages. The recent TACO (Trump Always Chickens Out) and Iran allowing “non-hostile ships” to transit the Strait of Hormuz, along with crude oil prices dropping below USD 100/bbl have reduced immediate energy supply risks. With our base case assuming gradual de-escalation, current valuation provides a favourable entry point, with limited downside.,” it added.
Gift Nifty at 22,880 indicates that Nifty may see a gap up opening of about 450 points.
Ponmudi R, CEO of Enrich Money, said Indian markets are expected to open sharply higher with a gap-up, supported by strong global cues amid rising expectations of de-escalation in West Asia and a corresponding moderation in crude oil prices.
The markets closed on a robust note, with the S&P 500 gaining nearly 3 per cent and the Nasdaq rising over 3.5 per cent, while Asian markets have also opened strong, with the Kospi up over 5 per cent and the Nikkei gaining more than 3 per cent, indicating a firm positive start for domestic equities. Additionally, Brent crude oil has eased below the $105 mark, providing further support to sentiment.
“However, underlying risks continue to persist. The ongoing US–Israel–Iran conflict remains a key overhang, keeping global sentiment cautious and event-driven. Foreign Institutional Investors (FIIs) continue to be aggressive sellers, with record outflows exceeding ₹1 lakh crore in March, reflecting sustained global risk aversion. At the same time, the Indian rupee has weakened significantly, breaching the 95/USD level and nearing the 96 mark, marking one of its weakest phases in over a decade and adding pressure on macro health,” Ponmudi said.
Despite an improvement in near-term sentiment on hopes of de-escalation in West Asia and softer crude prices, the broader market backdrop remains volatile and sensitive to risk. Investors are likely to focus on key variables including movements in crude oil prices, developments on the geopolitical front, foreign investor flows, and the trajectory of the rupee, he further said.