Mumbai, June 20: Hopes for a peace agreement between the United States and Iran, along with a decline in Brent crude prices, have bolstered investor confidence. As a result, the Indian stock market’s major indices recorded gains for the second consecutive week.
During the week, the Nifty index rose by 1.65%. However, on the last trading day, it fell by 0.64%, closing at 24,013.10. Meanwhile, the Sensex dropped by 607 points, or 0.78%, to end at 76,802. Despite this, the Sensex achieved a weekly gain of 1.69%.
On the last trading day, the domestic market experienced limited trading ranges. A significant sell-off in IT stocks, following three days of gains, put pressure on the market.
Brent crude prices had dipped below $80 per barrel amid the potential for a US-Iran peace agreement. However, the decline halted at the week’s end due to the sudden cancellation of peace talks and profit-taking.
During the week, the Indian rupee strengthened against the dollar, gaining nearly 79 paise to reach around 94.35 per dollar.
Analysts believe that improvements in the geopolitical situation could continue to support market sentiment in the upcoming week.
A 14-point memorandum of understanding (MoU) was signed between the US and Iran during the week. This agreement includes reopening the Strait of Hormuz, lifting naval blockades, and restoring the movement of commercial vessels.
In terms of regional indices, there was notable growth in consumer durables, real estate, pharmaceuticals, and defense sectors. The defense sector recorded a robust gain of 6.6% during the week, attributed to the region’s strong fundamentals.
Conversely, the IT sector was the weakest performer, with the Nifty IT index declining by 6.5%. This drop followed global IT giant Accenture’s downward revision of its stable currency revenue growth forecast for fiscal year 2026, coupled with a weaker-than-expected outlook.
On the monetary policy front, the US Federal Reserve maintained a cautious, data-driven approach, providing limited signals for the future. This reinforced the perception that interest rates may remain elevated for an extended period.
Analysts note that the Reserve Bank of India (RBI) is also maintaining a cautious stance. However, improvements in the economic landscape may gradually emerge due to falling crude oil prices and progress in trade agreements with the UK and the US. Still, a clear policy direction may take one or two more review meetings to materialize.
Throughout the week, the broader market outperformed major indices. The Nifty Midcap 100 index rose by 2.62%, while the Nifty Smallcap 100 index surged by 3.23%.
Investors are also closely monitoring the progress of the monsoon in India. So far in June, total rainfall has been recorded at 38% below normal, with El Niño conditions persisting.
Market experts believe that further delays in monsoon progress could raise concerns regarding Kharif crop sowing, food inflation, and rural demand.
Additionally, upcoming data on India’s PMI and credit growth, along with the US PCE inflation and GDP figures, could play a crucial role in determining market direction in the coming days.
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