By V K Sharma
Global markets rallied last week following the announcement of a ceasefire in the Israel-Iran conflict. The Nasdaq and the S&P 500 climbed 4.25% and 3.82%, respectively, ending the week at record highs. The Dow gained 3.82% but remains 2.65% below its all-time high set in December 2024.
Back home, the Nifty also advanced, rising 2.09% for the week to close at 25,637. It registered an intraday high of 25,654, achieving the 25,650 target we had outlined in our article dated April 21, 2025. However, the benchmark is still 640 points, or 2.49%, shy of its all-time high of 26,277 recorded on September 27, 2024.
The Bank Nifty posted a fresh record high with a 2.12% gain, while the SmallCap Index surged 4.33%.
After expanding by 2.4% in the final quarter of 2024, the US GDP contracted by 0.5% in the first quarter of 2025. Economists had forecast a smaller decline of 0.2%. This marked the first quarterly contraction since Q1 2022. The decline is largely attributed to a surge in imports ahead of impending tariff hikes.
The Federal Reserve said on Friday that all major US banks passed its annual stress tests. However, this year’s tests were arguably less rigorous than in previous years.
Over the next fortnight, quarterly earnings will begin rolling in both India and the US. Markets will also be closely watching the July 9 deadline set by Trump for finalising trade deals, after which reciprocal tariffs are expected to take effect.
On Friday afternoon, Trump abruptly ended trade talks with Canada in retaliation for Ottawa’s imposition of a digital services tax on American tech giants. Similar issues are likely to arise with the EU as well, and it seems unlikely that deals will be concluded before the deadline. Trump may have no choice but to extend it.
Prime Minister Modi will embark on a five-nation tour on July 2. He will visit Trinidad and Tobago, Argentina, Ghana, and Namibia, before heading to Rio de Janeiro for the BRICS+ summit, where he is also scheduled to attend a state dinner.
West Asia is likely to remain on the front burner despite the ceasefire. Iran’s enriched uranium remains unaccounted for, and there are concerns about potential efforts to arm Tehran with fighter jets. Israel is unlikely to remain a passive observer.
On the technical front, the 25,220 level—which previously acted as resistance—is expected to serve as the first support. The next logical target for the Nifty is 26,277. Once that is breached, the index could aim for 27,350, which represents a 123.6% retracement of the decline from the all-time high to 21,243.
(The writer is a technical analyst and former head of clients’ group, HDFC Securities)
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