The prospects of a potential peace deal between the US and Iran have boosted stock market sentiment. Benchmark Nifty 50 reclaimed the 24,400 mark in intraday trade on Thursday, 7 May. The index looks set to extend gains for the second consecutive week. From the April 2 low of 22,182.55, the benchmark index has jumped 10%.
The current setup of the Indian stock market appears mildly positive, supported by positive global cues and a decline in crude oil prices, even as the persisting uncertainty about a final US-Iran peace deal keeps volatility elevated.
The headline-sensitive market is closely monitoring the news flows about the potential peace deal that can end the West Asian conflict.
According to reports, the US had sent a one-page memorandum of understanding to Iran through Pakistani mediators to settle the conflict. Iran is reportedly reviewing the proposal.
If a peace deal is announced, can the Nifty 50 hit 25,000 as early as May?
Indian stock market outlook
While a potential peace deal between the US and Iran would certainly be positive for the Indian market, crude oil prices remain the key variable to watch.
“Crude should cool towards the $80 per barrel mark or even lower for markets to sustain a strong rally,” said Vinod Nair, Head of Research, Geojit Investments.
“Positive developments may trigger a sharp short-term bounce. But after that initial excitement, investors will again focus on fundamentals such as crude prices and global economic conditions. So, some amount of profit booking is possible after the recent rally,” Nair said.
The market has already seen a strong recovery, and naturally, some profit booking can happen in the short term. Apart from the Middle East developments, there was also optimism surrounding the recent state election outcome.
“Historically, state election results have not had a major positive impact on the stock market in the short term. There could be some long-term benefits for companies linked to the Northeast region, but for now, many positives seem to have been factored into prices. The market will need more concrete progress in the Middle East situation. If crude oil prices move closer to $80 per barrel, Indian equities could perform very well,” said Nair.
Crude oil started the year near $60 per barrel. At this juncture, it looks difficult that oil prices will come back to this level soon, which means the full impact of crude oil prices on the Indian economy and earnings of Indian corporates is yet to be seen.
“In the short term, crude may remain elevated, possibly around $90–95 per barrel, because of supply, infrastructure and capacity-related issues. However, if there is clear and lasting peace in the region, crude could gradually cool down to the $65–75 range by the end of the year. Even if crude stabilises near $70, that would still be a very positive development for India,” said Nair.
“The first quarter of FY27 could be challenging, and markets may witness some volatility over the next one to three months as investors digest various global and domestic factors. But beyond that phase, the outlook appears better,” Nair added.
Rohit Srivastava, the founder and market strategist at Indiacharts.com, believes it is a bit early to say that the Nifty 50 may rise to 25,000 in May itself because in April, the index made a high of 24,600, and the index is yet to surpass that.
“It is not clear whether we will make a new high right away or we will make it in June. Probably saying June is easier because if there is any volatility in May, eventually things should pick up by June. So, in June you will definitely get there, I can’t say about May for sure,” said Srivastava.
Srivastava highlighted that the index is caught between 24,300 and 23,800. Now it’s gone slightly above 24,300, but it’s hard to say if it will sustain it.
“I’ll say 24,450 on the upside and 23,550 on the downside as a wide range in which it can keep moving in May,” said Srivastava.
Hitesh Tailor, a research analyst at Choice Equity Broking, highlighted that the domestic markets continue to witness buying at lower levels, but traders are likely to remain selective amid profit booking at higher zones.
“Overall, the broader trend remains constructive, though intermittent volatility and news-driven swings may persist,” said Tailor.
“Immediate support is placed in the 24,000–24,200 zone, while resistance is seen in the 24,550–24,600 range. RSI indicates strengthening momentum, while easing India VIX and derivatives data reflect a positive market bias,” said Tailor.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
