By Kishor Kadam & Christina Titus
Global markets remained on tenterhooks on Tuesday, in tune with the fast-paced developments in the Israel-Iran conflict. A ceasefire agreement, first announced by US President Donald Trump, lifted market sentiments early in the day — with benchmark equity indices rallying, crude prices tumbling, and rupee gaining against the dollar — but the mood soured hours later as Israel and Iran violated the truce and exchanged fire.
By the end of the day, indices gave up most of its gains as the tenuous truce in West Asia tested investor nerves. The Sensex crossed the 83,000 mark, rising 1,121 points, or 1.37%, at its intra-day peak, but finally settled 158.32 points, or 0.19%, higher at 82,055.11. The Nifty also erased sharp intra-day gains to close at 25,044.35, up 72.45 points, or 0.29%.
“Initial gains in the domestic market, driven by the ceasefire news and a sharp drop in crude oil prices, were quickly erased as reports of renewed West Asia tensions unsettled investor sentiment. Volatility was also heightened by Tuesday’s expiry day,” said Vinod Nair, head of research, Geojit Financial Services.
As the fear of oil supply disruptions dissipated, Brent crude prices fell by a significant 5.57% to $67.50 per barrel but later pared losses to trade around $70, still down nearly 3% for the day.
Nirpendra Yadav, senior commodity analyst, Bonanza said that the US President’s announcement led to a decrease in geopolitical risk premium that has been factored into oil prices. “If ceasefire holds, oil prices may stabilise, and even further decline in the coming days,” he added.
The fall in crude oil prices saw the rupee gain 77 paise to close at 85.98 against the US dollar — its best session in a month and the second best in 2025.
As the ceasefire announcement initially faltered, Trump expressed deep frustration with both Israel and Iran and warned against any further attacks. “ISRAEL is not going to attack Iran. All planes will turn around and head home, while doing a friendly ‘Plane Wave’ to Iran. Nobody will be hurt, the Ceasefire is in effect!” he asserted.
The ceasefire announcement came a day after Iran targeted a US airbase in Qatar in response to America’s attack on its nuclear facilities over the weekend.
Trump’s assertion on ceasefire lifted the market sentiment again, particularly in the US and Europe.
US and European equity markets were trading higher on Tuesday. The Dow Jones was up 0.85%, the S&P 500 rose 0.75%, and the Nasdaq gained 1.19%. In Europe, the Euro Stoxx 50 Index surged 1.41%. France’s CAC 40 climbed 1.11%, Germany’s DAX jumped 1.62%, while the UK’s FTSE 100 edged up by 0.22%.
In India, the 10-year government bond yield fell 5 basis points to 6.25%. “A more than $10 fall in crude oil prices lifted the rupee today. Exporters were anticipating a sharper fall, but once the stop-losses were hit, they rushed to sell. However, the RBI intervened around the 86 level to curb the exuberance,” said Anindya Banerjee, head of currency and commodity research, Kotak Securities.
Forex traders noted that expected inflows from upcoming IPOs may also support the rupee in the near term. “I expect the rupee to trade in the 85.50-86.50 range with an appreciating bias, driven by a weaker dollar and softer crude oil prices,” Banerjee added.
The dollar index, which measures the greenback against a basket of six major currencies, weakened to 98, boosting Asian currencies.
The South Korean won led gains with a 1.64% rise, followed by the Malaysian ringgit at 1.06%. The Indian rupee was the fourth-best performer in the region. However, it has still depreciated 0.46% so far in June.
In the equity market, broader indices outperformed the benchmarks. The BSE Midcap index rose 0.54%, and the BSE Smallcap gained 0.71%.
Foreign portfolio investors sold shares worth Rs 5,266.01 crore while domestic institutional investors bought shares worth Rs 5,209.60 crore on Tuesday, as per provisional data by the BSE.
Market breadth was strong, with 2,662 gainers versus 1,339 losers on the BSE. Investors’ wealth increased by Rs 2.26 lakh crore. Looking ahead, the sustainability of an uptrend will depend on the strength of domestic earnings, particularly in the upcoming Q1 results season, which is underpinned by favourable macroeconomic indicators, Nair added.
On the sectoral front, services, telecom, commodities, metals, and financial services led the gains, rising up to 2.13%.
(With inputs from Arunima Bharadwaj)
