Indian markets are likely to see a sharp surge at open on Wednesday as global stocks are rising due to a lull on the Iran-US front. As the talks between the US and Iran signalling conciliatory tones from both the sides, global stocks are rising sharply. Gift Nifty at 24,230 signals a gap up opening of around 380 points for Nifty. However, rising inflation and weak monsoon forecast likely to keep market under check, said analysts.
Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth, said: Indian markets are set to open on a strong note today, with Gift Nifty signalling a solid gap-up start near the 24,200 zone, compared to Monday’s close of 23,842. This indicates a sharp recovery in sentiment after the recent risk-off phase, driven largely by improving global cues and easing geopolitical concerns.
“The shift in momentum comes despite the ongoing tensions around the Strait of Hormuz. Markets appear to be looking past immediate risks and are instead pricing in the possibility of renewed diplomatic engagement between the US and Iran. This change in narrative has led to a sharp correction in crude oil prices, which is a key positive for India given its dependence on energy imports. Lower crude not only eases inflation concerns but also provides relief to the rupee and supports corporate margins across sectors,” he added.
The headline CPI inflation rose slightly to 3.4% in March 2026 from 3.2% in February 2026.
Aditi Nayar, Chief Economist, ICRA Ltd, expects the YoY inflation in the F&B segment to rise further and cross the 4%-mark in April 2026 from 3.7% in March 2026, led by the vegetables, edible oils, and readymade food segments. “Further, the impact of the unrest in West Asia will continue to feed into prices of several items such as alternate fuels, airfares (owing to higher ATF prices), restaurants (owing to higher commercial LPG prices), which along with rising input prices is likely to harden the April 2026 headline inflation print,” she said adding “Overall, we expect the CPI inflation to cross 4.0% in April 2026, coming back into the upper half of the MPC’s medium term target range”
The Indian Metrological Department (IMD) has pegged the 2026 monsoon at 92 per cent of the Long Period Average (LPA), with a model error margin of ±5 per cent. Skymet has projected rainfall at 94 per cent of LPA, also with a ±5 per cent margin. This places the season firmly in the “below-normal” category; a normal monsoon is defined as rainfall between 96 per cent and 104 per cent of the LPA.
Ponmudi R, CEO of Enrich Money, said while markets are responding favourably to easing geopolitical tensions and lower crude prices, developments remain at an early stage. As a result, although a gap-up opening is anticipated, the sustainability of the move will depend on continued follow-through buying and further positive news flow.
“However, sentiment remains sensitive to sudden developments, and any adverse news could quickly alter market direction. Markets are currently highly news-driven, with near-term trends likely to be influenced by geopolitical developments, crude oil price movements, currency fluctuations and foreign institutional investor (FII) activity,” he added.
According to HDFC Asset Management’s Market Review, the war in West Asia poses significant risks to the global economy. It’s akin to a supply shock especially for Asia given its dependence on the zone for its energy needs. If the conflict gets elongated, it risks a general increase in price levels and lower output increasing stagflationary risks.
“Throughout 2025 and early 2026, a widespread calibrated easing cycle saw major central banks like the U.S. Fed and ECB cut rates by 75–100 bps. However, with energy prices rising sharply due to the war in West Asia, global central banks may need to reassess their policy stance, increasing the risk of worsening commodity prices and a rebound in inflation alongside lower growth,” fund house said in the note. Going forward, the direction and strength of demand will depend on whether the temporary truce between Iran and US holds and energy supplies are restored to pre-war levels, it added.
HDFC Mutual Fund further said Indian equities remain optimistic supported by strong domestic growth outlook, healthy corporate profitability, and pro-growth policies such as income tax and GST relief over the medium to long term. However, near-term risks include escalation in geo-political tensions and cyclical moderation in corporate earnings.