Domestic markets are likely to witness a gap-down opening on Monday amid the escalating conflict between Iran and Israel. Gift Nifty at 24,790 signals a gap-down opening of about 170 points for Nifty. Investors will move to a risk-on strategy and adopt a cautious approach, said analysts.
Vinod Nair, Head of Research, Geojit Investments Ltd, said: “Early optimism, driven by progress in US–China trade negotiations, was overshadowed by escalating geopolitical tensions after Israel launched a strike on Iran’s nuclear facilities. This development sparked a global risk-off sentiment, leading to a rally in safe-haven assets such as gold and US bonds. Oil prices surged past $76/barrel after months of consolidation, as fears of supply disruptions resurfaced.”
On the domestic front, CPI inflation eased to a 75-month low, offering some relief, he said, adding: “However, the recent spike in crude prices could reverse this trend if the Middle East conflict intensifies. Sectorally, rate-sensitive segments like auto, realty, and banking saw profit-booking, while export-oriented sectors such as IT and pharma gained amid a weaker rupee.”
Looking ahead, investors are expected to remain cautious amid premium valuations and geopolitical risks. All eyes are now on the upcoming US. Fed meeting, where interest rates are likely to remain unchanged. However, the Fed’s commentary and economic projections will be closely scrutinised for future policy cues, he further said.
Meanwhile, Asian stocks are up in early deal on Monday. Japan, Korea, China and Australian markets eke out gains even as Taiwan and Hang Seng slipped into red.
According to Emkay Global Research, report: “We expect the markets to pause for breath after a frenetic ~10% Nifty rally since the tariff pause announcement on 9-Apr-25.
“Valuation comfort has largely eroded and escalation of the West Asia conflict could trigger a sell-off. From a medium-term perspective, though, we are not worried. The crude price spike is likely to be transient and India’s fundamentals are otherwise looking up. We see an earnings recovery on the back of aggressive RBI easing and weak commodity prices. Our sector preferences are unchanged and we are positive on Discretionary, Technology, and Materials, and UW on Financials and Staples. Our weekly product returns in a new avatar – a changed title and a new cycle of weekend publication,” it added.
Puneet Singhania, Director at Master Trust Group, said: Higher oil prices have reduced the likelihood for an interest rate cut by the U.S. Federal Reserve, which is scheduled to meet next week. Adding to the market turmoil, U.S. President Donald Trump’s renewed tariff threats, set to take effect from July 9, have reignited fears of a global trade war., he said. “These tariffs, targeting various trading partners, have raised concerns about retaliatory measures from major economies like China, which could disrupt global trade dynamics. The India VIX, a measure of market volatility, spiked over 3%, signaling increased investor anxiety. Foreign institutional investors (FIIs) offloaded Indian equities worth ₹1,246 crore. However, strong domestic institutional flows offset the pressure, as DIIs infused ₹18,637 crore into the cash segment,” he further said.
Published on June 16, 2025