The benchmark equity indices rebounded on Monday after a two-day decline driven by an escalating Israel-Iran conflict, tracking gains in Asian markets and a dip in domestic volatility.
The Sensex jumped 677.55 points or 0.84 percent to settle at 81,796.15. During the day, it surged 747.22 points or 0.92 percent to 81,865.82. The Nifty climbed 227.90 points or 0.92 percent to 24,946.50.
SBI Life Insurance Company, Oil & Natural Gas Corporation, Hero MotoCorp, HDFC Life Insurance Company and Cipla were among the major gainers, rising up to 3 percent.
Here are the key factors behind the market upmove:
1) Positive Trend in Asian Markets: Asian equities traded mostly in the green, with indices such as South Korea’s Kospi, Japan’s Nikkei 225, and China’s SSE Composite posting gains. However, Hong Kong’s Hang Seng index remained under pressure. Wall Street futures were also in positive territory, indicating firm global cues.
2) Dip in India VIX: The India VIX, a measure of market volatility, eased 1.84 percent to 14.80, signalling reduced investor anxiety and supporting the market sentiment.
3) Progress on India-US Trade Deal: India and the United States are reportedly close to finalising a bilateral trade agreement. Both sides have begun work on the proposed text, with expectations of a deal by July 8. The development is being seen as positive for trade and investment flows, lending support to market optimism.
India, US to come up with final proposal of trade deal soon: Report
4) Focus on US Fed, BoJ Meetings: Investors are awaiting the outcome of the US Federal Reserve’s policy meeting scheduled for June 18. The central bank is widely expected to maintain interest rates in the 4.25–4.50 percent range.
However, comments from Fed Chair Jerome Powell will be closely tracked, especially after recent data showed signs of easing inflation and a softening labour market. Meanwhile, the Bank of Japan is expected to keep rates steady at its meeting on June 17 amid growing concerns about global trade tensions.
5) Buying in index heavyweights: The IT index rose 1.1% while high-weight financials gained 0.4%, set to snap a four-day losing streak. Index heavyweights HDFC Bank and Reliance Industries rose about 1% each. Eleven of the 13 major sectors logged gains on the day while smallcaps and midcaps traded flat.
"Interestingly, there is no panic in equity markets. Markets will be severely impacted only if Iran closes the Strait of Hormuz triggering a huge spike in crude. This appears to be a low probability event now," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.
6) DIIs provide comfort: Domestic institutional investors have been net buyers of Indian shares for 19 straight sessions, infusing Rs 88,730 crore over the period, including Rs 2,906 crore on Friday.
"Strong domestic institutional investor flows are cushioning the impact of global uncertainty and volatile foreign flow," Puneet Singhania, director at Master Trust Group told Reuters.
Harshal Dasani, Business Head, INVasset PMS, noted "Global markets often behave contrary to mainstream expectations—and the recent escalation between Israel and Iran is a textbook example. While the initial reaction was a spike in oil prices and a flight to safety, the absence of direct supply disruptions, especially through strategic chokepoints like the Strait of Hormuz, quickly settled nerves. Crude has since stabilized, easing inflation concerns and allowing markets to refocus on economic fundamentals."
"What’s crucial here is that markets don’t like uncertainty—but once a geopolitical flashpoint becomes front-page news, it’s often already priced in. The Israel–Iran conflict, while serious, has not materially disrupted global trade or economic activity. As clarity emerged and worst-case scenarios were ruled out, markets bounced back. Investors are again viewing dips as opportunities, with capital rotating into domestic themes that are largely insulated from global geopolitical shocks. We’re seeing renewed strength in internal consumption-driven sectors—especially energy, power, defence, and capital expenditure-linked plays—which remain structurally intact. These areas benefit from long-term policy support, strong demand visibility, and minimal dependence on external macro conditions. Moreover, corporate earnings remain resilient, recession fears have eased, and central banks like the Fed are maintaining a steady rate stance. This trifecta—stable policy, strong earnings, and sectoral rotation—is reinforcing the “buy-on-dip” behaviour we’re witnessing. Every fresh negative headline may cause temporary jitters, but the broader trend remains bullish. As long as geopolitical risks remain contained and don’t evolve into systemic shocks, markets will continue to absorb such events and march toward new highs—driven by domestic tailwinds, selective global optimism, and resilient investor sentiment," he added.
Technical View
Anand James, Chief Market Strategist at Geojit Financial Services, said, “We are not confident that the bounce-off from the lower Bollinger Band last Friday has the strength to continue. Favoured view expects upsides to be limited to 24,832 and settle near the 24,500 vicinity. If the consolidation and renewed upside attempts thereof do not succeed in clearing 24,832/88, expect a drop to 24,060.”
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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