Indian equity markets opened on a flat-to-cautiously positive note on Monday, with the BSE Sensex opening in green and the Nifty50 trading above 24,050, according to The Times of India. The market remained under the shadow of US-Iran conflict uncertainties even as both nations agreed to halt military attacks and resume peace talks.
Rupee Strengthens on Softer Crude, But Dollar Caps Gains
The Indian rupee strengthened by 20 paise to 94.25 against the US dollar in early trading, supported by softer crude oil prices. According to forex market participants cited by The Times of India, declining oil prices continued to provide support, while improving foreign capital inflows also boosted sentiment. However, gains were capped by a resilient US dollar and subdued investor risk appetite.
In the interbank foreign exchange market, the rupee opened at 94.36 against the greenback before extending its gains to touch 94.25, an appreciation of 20 paise from its previous close of 94.45. The US dollar index (DXY) hovered near a 13-month high, posing the biggest challenge to the rupee's near-term outlook.
US-Iran Ceasefire Talks and Global Data in Focus
According to HDFC Bank’s Treasury Research Desk:
"After a re-escalation in the conflict over the last few days, US & Iran agreed to halt military attacks and meet this week to resume peace talks. The DXY Index traded at 101.3 while Brent crude oil price stood at $72.50 pbl in early trade today. This week, in addition to conflict-related developments, the ECB’s annual forum on central banking, key data releases in the US and the Euro Area and political developments in the UK are likely to be on the market’s radar. The ECB’s annual forum is likely to be closely watched for guidance on interest rate outlook by central bankers including the newly appointed Fed Chair Kevin Warsh."
On the data front, US non-farm payroll data due on Thursday is expected to show an addition of 110-114K jobs in June versus 172K earlier, the source added. Any upside surprise could increase the likelihood of a rate hike. As per the CME Fed Watch tool, the market is pricing in a ~47% probability of a rate hike at the Fed’s September meeting.
Domestic Market Outlook: Positive Factors and Key Risks
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, offered a balanced view. He noted that Brent crude remains low below $73 due to unrestricted passage through the Strait of Hormuz, calling it "a big macro positive for India" that can impart resilience to the market. He also highlighted two additional supportive factors: First, "relentless FII selling which has been weighing on markets has abated. During the last nine trading days, FIIs were buyers in the cash market, though by small amounts." Second, South Korean and Taiwanese markets, which had been attracting massive investments, have turned weak and excessively volatile, with India outperforming both markets last week.
However, Vijayakumar cautioned: "It is too early to conclude that the Indian market will continue to rally. A big concern now is the hugely deficient (43%) monsoon. If the monsoon revives and compensates for the deficit in the coming weeks, the market also will respond positively. In the coming days FY Q1 result expectations will influence the market. Lots of stock specific moves are likely."
Gift Nifty and Key Levels
Gift Nifty was trading at 24,100, down by 5 points, indicating a flat-to-cautiously positive opening. Asian markets were mixed in early trade as investors assessed month-end portfolio rebalancing flows while monitoring US-Iran developments. In the previous session, the Nifty 50 closed with moderate gains but ended well off the day's high due to profit booking. The index continued to face resistance around the 24,200 – 24,250 zone, which has emerged as a crucial hurdle over the past several sessions.
Key Market Data Summary
| Indicator | Value | Source |
|---|---|---|
| Rupee vs USD | 94.25 (up 20 paise) | Interbank FX |
| Brent Crude | $72.50 per barrel | HDFC Bank Treasury |
| DXY | 101.3 | HDFC Bank Treasury |
| Gift Nifty | 24,100 (down 5 points) | The Times of India |
| Nifty50 Resistance | 24,200 – 24,250 | Previous session |
| US NFP Expectation | 110-114K jobs (June) | Market consensus |
| Fed Rate Hike Probability (Sept) | ~47% | CME Fed Watch |
Next milestone: The US-Iran peace talks scheduled for this week, along with the US non-farm payroll report on Thursday and the ECB’s annual forum, will be key events guiding market direction.
Sources:
