Fresh military exchanges between the US and Iran failed to trigger panic across global financial markets, with investors taking a more measured view of the conflict. After an initial surge, crude oil prices retreated from near $93 a barrel, while gold extended its recent decline. Asian markets traded mixed on Wednesday morning, and Gift Nifty signalled a positive opening for Indian equities.
US markets witnessed sharp swings on Tuesday before closing on a mixed note. A rebound attempt in semiconductor stocks lost momentum, while several technology counters that had rallied strongly on Monday slipped into negative territory. Falling crude oil prices helped the Dow Jones Industrial Average end in positive territory.
The Dow gained 86.10 points, or 0.17 percent, to close at 50,872.11. The S&P 500 fell 19.08 points, or 0.26 percent, to 7,386.65, while the Nasdaq Composite declined 250.84 points, or 0.97 percent, to 25,678.82.
US futures were slightly lower on Wednesday morning, with Dow futures down 0.07 percent, S&P 500 futures down 0.16 percent and Nasdaq futures down 0.22 percent.
Among Indian ADRs traded in New York, HDFC Bank rose 1.22 percent during regular trading and added another 0.04 percent in after-hours trading to close at $23.30. ICICI Bank gained 2.30 percent during market hours before easing 0.14 percent in extended trade to $26.25.
Infosys, after falling 0.33 percent during regular trading, recovered 0.49 percent in after-hours trading to close at $12.30. Wipro ended at $2.1698 after recovering 0.45 percent in post-market trade.
European markets ended lower for a second consecutive session on Tuesday, although French indices managed marginal gains.
Asian markets traded in different directions on Wednesday. Japan's Nikkei declined around 1 percent, while Australia's benchmark index gained 0.60 percent. South Korea's Kospi fell 2.5 percent as semiconductor stocks came under pressure, with Samsung Electronics losing 4.5 percent and SK Hynix falling 4 percent.
Hong Kong opened lower while Shanghai moved higher. China's consumer inflation in May came in below expectations, though wholesale inflation touched a four-year high.
Defying the weak mood across Asia, Indian equities advanced strongly on Tuesday. Although benchmarks briefly slipped into negative territory during the session, they recovered to close near the day's highs.
While the Sensex and Nifty gained just over half a percent, broader markets outperformed significantly. Mid cap and small cap indices rose more than 1.5 percent each.
Banking, financial services, real estate and automobile stocks led the rally. Tourism, defence and capital market stocks also posted strong gains, while IT and media shares remained under pressure.
The Sensex gained 394.50 points, or 0.54 percent, to close at 73,918.76. The Nifty rose 119.10 points, or 0.52 percent, to 23,242.10. Bank Nifty surged 1,130.75 points, or 2.09 percent, to 55,194.50.
The Nifty Midcap 100 index climbed 1.35 percent to 60,715.45, while the Smallcap 100 index advanced 1.69 percent to 18,063.60.
More than 60 percent of listed shares ended higher. On the BSE, 2,725 stocks advanced and 1,489 declined. On the NSE, 2,373 stocks gained while 889 fell.
Rajesh Exports hit the lower circuit for a fourth consecutive session, extending losses amid controversy over alleged accounting irregularities. LIC, which owns more than 10 percent in the company, has reportedly seen the value of its investment erode sharply over the past few years.
Bank stocks rallied after the Reserve Bank of India unveiled measures aimed at increasing foreign currency inflows and supporting the rupee. Detailed operational guidelines were issued on Tuesday.
The measures are expected to make foreign currency deposits by non-resident Indians more attractive by allowing banks to offer higher interest rates and raise additional foreign currency resources. Market participants estimate that Indian banks could attract between $50 billion and $60 billion over the next three months.
Federal Bank touched a record high of ₹315.90 before closing 3.64 percent higher at ₹315.70. South Indian Bank gained 4.57 percent to ₹45.79, while Dhanlaxmi Bank rose 4.93 percent to ₹33.
New-age defence companies posted strong gains, led by aerospace, electronics and drone manufacturers.
Data Patterns jumped 10.82 percent, Paras Defence and Space Technologies gained 7.7 percent and MTAR Technologies advanced 6.8 percent.
Foreign portfolio investors remained net sellers on Tuesday, offloading equities worth ₹4,566.03 crore in the cash market. Domestic institutions absorbed the selling and purchased shares worth a net ₹6,159.48 crore.
Foreign investors have sold more than ₹2.76 lakh-crore worth of Indian equities so far in 2026.
Gold has now erased all its gains for 2026. The precious metal fell below $4,200 an ounce on Wednesday morning following renewed US military action against Iran.
Gold closed Tuesday down $70.70 at $4,260.60 an ounce. It dropped as much as 1.5 percent to $4,183 before recovering slightly to around $4,195.
In Kerala, the price of 22-carat gold rose by ₹1,080 per sovereign on Tuesday to ₹1,12,320. A sharp correction is expected in local prices on Wednesday.
Silver fell to $64.75 an ounce.
Platinum traded at $1,684 an ounce, palladium at $1,184 and rhodium at $7,550.
Gold's direction in the coming weeks will largely depend on geopolitical developments, crude oil prices and US interest rate decisions.
Citigroup recently revised its short-term gold outlook, projecting a decline to $4,000 an ounce within three months, compared with its earlier target of $4,300. The bank expects prices to climb towards $4,500 during the first half of 2027.
Technical analysts have also noted that gold has slipped below its 200-day moving average, suggesting further weakness before a sustained recovery.
Industrial metals traded mixed on Tuesday. Copper gained 0.40 percent to $13,715.85 a tonne, supported by strong Chinese export data, which showed exports rising 19 percent last month.
Aluminium fell 1.53 percent to $3,542.65 a tonne. Market estimates suggest prices could eventually decline towards the $2,800-$3,000 range. Zinc and tin advanced, while nickel and lead weakened.
The combined impact of Middle East tensions and El Niño-related weather concerns continues to create volatility in rubber markets.
International rubber prices softened. In Bangkok, RSS-3 fell to $307.10 per quintal and RSS-1 to $310.55.
In Kerala, however, RSS-4 rubber touched a record ₹26,800 per quintal. Synthetic rubber prices declined about 2 percent.
The US Dollar Index slipped below the 100 mark on Tuesday and closed at 99.91. It was trading around 99.98 on Wednesday morning.
The euro strengthened to $1.154, while the pound rose to $1.3377. The Japanese yen traded at 160.33 per dollar and the Chinese yuan strengthened to 6.77 per dollar.
The yield on the US 10-year Treasury bond eased to 4.534 percent.
The rupee initially came under pressure despite the RBI's measures to boost dollar inflows. However, intervention by the RBI and exporters helped the currency recover.
The rupee gained 36 paise to close at 95.35 against the dollar.
In the offshore non-deliverable forward market, the dollar was quoted around ₹95.40 on Wednesday morning. The yuan traded at ₹14.08, while the euro slipped to ₹110.06.
After Monday's sharp rally, crude oil prices fell on Tuesday. Brent crude settled at $91.45 a barrel.
Following renewed US strikes on Iran, Brent briefly approached $93 on Wednesday morning before easing back to around $91.73. WTI crude traded near $88.43 a barrel.
Cryptocurrency markets remained under pressure. Bitcoin slipped below $61,750, while Ether traded below $1,640 and Solana remained under $65.
Sensex: 73,918.76 (+0.54%)
Nifty 50: 23,242.10 (+0.52%)
Bank Nifty: 55,194.50 (+2.09%)
Midcap 100: 60,715.45 (+1.35%)
Smallcap 100: 18,063.60 (+1.69%)
Dow Jones: 50,872.11 (+0.17%)
S&P 500: 7,386.65 (-0.26%)
Nasdaq: 25,678.82 (-0.97%)
Dollar: ₹95.35 (-₹0.36)
Gold (ounce): $4,260.70 (-$70.70)
Gold (sovereign): ₹1,12,320 (+₹1,080)
Brent crude: $91.45 (-$2.80)