Despite the second straight day of intense US-Iran aerial attacks, global financial markets are showing signs of recovery as investors bet that the conflict may remain contained and diplomatic efforts could still prevent a wider regional war.
Although military strikes continued, Iran's oil refineries and power infrastructure have largely remained untouched, signalling that Washington may be attempting to leave room for negotiations rather than pursuing a full-scale escalation. Iran, meanwhile, has focused its retaliation on US military facilities in Kuwait, Bahrain, Qatar and the UAE, without targeting civilian infrastructure.
Peace initiatives led by Pakistan and Qatar have also helped calm investor nerves. As a result, crude oil prices have stayed below the crucial $80-a-barrel mark, while several Asian equity markets traded higher on Thursday morning.
Gift Nifty, which closed at 23,954.50 on Wednesday night, climbed to around 24,012 in early trade, indicating a strong opening for Indian equities.
India's southwest monsoon deficit has narrowed significantly. According to the India Meteorological Department, rainfall was 15 percent below normal as of July 8, compared with a 40 percent shortfall ten days earlier.
Rainfall for July is now expected to reach around 94 percent of the long-term average. Only 26 percent of the country's land area is currently experiencing severe rainfall deficiency.
Wall Street recovered sharply after suffering heavy losses earlier in the session as investors became optimistic that diplomatic efforts could gain momentum after the initial US strikes.
The Dow Jones had fallen more than 800 points during the day before trimming much of its losses, while the Nasdaq ended in positive territory. Market participants interpreted Washington's decision not to target Iran's refineries and power plants as an indication that the US is seeking to avoid a broader conflict and provide space for political negotiations.
On Wednesday, the Dow Jones declined 576.76 points (1.09 percent) to close at 52,348.39. The S&P 500 slipped 21.14 points (0.28 percent) to 7,482.71, while the Nasdaq Composite gained 51.96 points (0.20 percent) to finish at 25,870.65.
US futures were trading higher on Thursday morning, with Dow futures up 36 points, S&P 500 futures gaining five points and Nasdaq futures rising 69 points.
Indian stocks listed in the US ended mixed. HDFC Bank recovered in after-hours trading to close at $26.20 after falling sharply during regular trade. ICICI Bank extended its decline to end at $28.40. Infosys also recovered in post-market trading to close at $11.05, while Wipro finished at $1.84 after trimming earlier losses.
European markets closed sharply lower on Wednesday, with most major indices falling more than 2 percent.
Asian markets, however, opened on a stronger note on Thursday. South Korea's Kospi jumped nearly 3 percent after strong investor demand for SK Hynix's New York IPO. Japan's Nikkei gained around 2.25 percent, while Australia's benchmark index remained modestly lower.
Indian equities witnessed heavy selling pressure on Wednesday, with losses accelerating during the final hour of trade as concerns over the West Asia conflict intensified.
Higher crude oil prices, weakness across Asian and European markets, and a weaker rupee weighed on investor sentiment. All major sectoral indices ended in the red.
Foreign institutional investors remained net buyers, purchasing equities worth ₹1,962.80 crore in the cash market. Domestic institutional investors also remained net buyers, investing ₹790.16 crore.
Market breadth was weak. On the BSE, 971 stocks advanced while 3,331 declined. On the NSE, 686 stocks gained against 2,617 losers.
Gold remained volatile as investors weighed geopolitical risks against expectations of tighter monetary policy.
Minutes of the US Federal Reserve meeting offered no clear policy direction, with members expressing differing views on interest rates. Gold eventually settled $30.10 lower, or 0.73 percent, at $4,076.70 an ounce after recovering from steeper losses. It slipped further to around $4,065 in early Thursday trade.
In Kerala, 22-carat gold declined by ₹1,560 per sovereign to ₹1,04,960.
Silver closed at $58.38 an ounce before edging up to around $58.62 on Thursday morning.
Platinum traded at $1,586, palladium at $1,202 and rhodium at $7,800.
Industrial metals delivered mixed performances on Wednesday.
Copper fell 1.64 percent to $13,089.60 per tonne. Aluminium rose marginally to $3,149.47. Zinc and tin weakened, while lead and nickel posted gains.
International rubber prices continued their upward momentum, with Bangkok RSS-1 crossing $300 per quintal and RSS-3 approaching $297.
In Kerala, RSS-4 rubber climbed to ₹27,300 per quintal.
Cocoa prices jumped 4.82 percent to $6,036.72 per tonne, their highest level since January, amid concerns that El Niño could reduce production in West Africa.
Arabica coffee fell 1.27 percent to $3.135 per pound despite tightening global inventories following lower production in Brazil.
The US Dollar Index closed at 100.99 before edging above 101 in early Thursday trade.
The euro strengthened to $1.1424, while the pound rose to $1.3394. The Japanese yen weakened to 162.55 per dollar, while the Chinese yuan traded around 6.80 per dollar.
The yield on the US 10-year Treasury rose to 4.581 percent.
The Indian rupee weakened sharply on Tuesday, with the dollar closing at ₹95.56, up 59 paise. In the offshore non-deliverable forward market, the dollar briefly touched ₹95.86 before easing to ₹95.62.
Crude oil surged after the US attacks on Iran but remained below the psychologically important $80-a-barrel level.
Brent crude, which settled at $78.02 on Wednesday, rose to around $79.06 in early trade, while WTI touched $74.45.
Cryptocurrencies continued to face selling pressure amid geopolitical uncertainty.
Bitcoin slipped below $62,250, while Ether fell below $1,740 and Solana dropped below $78.
Sensex: 76,503.60 (-2.15%)
Nifty 50: 23,882.05 (-2.12%)
Bank Nifty: 56,742.60 (-2.51%)
Nifty Midcap 100: 61,322.75 (-1.55%)
Nifty Smallcap 100: 18,783.30 (-2.24%)
Dow Jones: 52,348.39 (-1.09%)
S&P 500: 7,482.71 (-0.28%)
Nasdaq Composite: 25,870.65 (+0.20%)
US Dollar/INR: ₹95.56 (+₹0.59)
Gold (per ounce): $4,076.70 (-$30.10)
Gold (22K, per sovereign): ₹1,04,960 (-₹1,560)
Brent crude: $78.02 (+$3.86)
