Key gauges end higher amid easing West Asia tensions

Indian equity benchmarks ended over half percent higher on Tuesday as easing tensions between Israel and Iran improved investor confidence and supported a recovery in risk assets. Also, recovery in the local currency against the dollar strengthened the mood although the undertone remained cautious amid a weak monsoon forecast and foreign investor outflows.

Some of the important factors in trade:

India reports current account surplus of $7.1 billion, or 0.7% of GDP in Q4FY26: The Reserve Bank of India's (RBI) data on Developments in India’s Balance of Payments has showed that India reported a current account surplus of $7.1 billion, or 0.7% of Gross Domestic Product (GDP), in the January-March quarter of 2025-26 (Q4FY26).

BHAVYA scheme to drive investments, provide social-infra, create jobs in India: Commerce and Industry Minister Piyush Goyal has said that the Rs 33,660 crore Bharat Audyogik Vikas Yojna (BHAVYA) scheme will help attract huge investments, create jobs, and provide modern social infrastructure in the 100 industrial parks to be developed under this initiative.

Fitch Ratings lowers India’s GDP growth projections to 6.4% for FY27: Fitch Ratings in its latest report has lowered India’s Gross Domestic Product (GDP) growth projections to 6.4% for the current fiscal (FY27) from 6.7% estimated earlier in March, as rising prices erode real incomes and dampen consumer spending, amid resilient capital expenditure.

RBI introduces US dollar-rupee forex swap facility to attract foreign capital inflows: With an aim to attract foreign capital inflows, the Reserve Bank of India (RBI) has introduced a US dollar-rupee forex swap facility for fresh FCNR (B) deposits mobilised by banks for a minimum tenor of three years and a maximum of five years.

Global front: European markets were trading mostly in green as a halt in hostilities between Israel and Iran boosted hopes that peace negotiations could move forward. Asian markets settled mostly higher as geopolitical tensions eased and tech stocks rebounded on dip buying.

Finally, the BSE Sensex rose 394.50 points or 0.54% to 73,918.76 and the CNX Nifty was up by 119.10 points or 0.52% to 23,242.10.

The BSE Sensex touched high and low of 74,035.41 and 73,426.18, respectively. There were 18 stocks advancing against 12 stocks declining on the index.

The top gaining sectoral indices on the BSE were Bankex up by 2.18%, Realty up by 1.76%, Auto up by 1.34%, Industrials up by 1.17% and Consumer discretionary up by 1.10%, while Utilities down by 0.63%, TECK down by 0.60% and IT down by 0.25% were the few losing indices on BSE.

The top gainers on the Sensex were Interglobe Aviation up by 4.04%, SBI up by 2.13%, ICICI Bank up by 2.03%, Axis Bank up by 1.92% and Bajaj Finance up by 1.84%. On the flip side, Titan Company down by 2.08%, NTPC down by 1.96%, Power Grid Corporation down by 1.64%, Tech Mahindra down by 1.02% and Eternal down by 1.01% were the top losers.

Meanwhile, Fitch Ratings in its latest report has lowered India’s Gross Domestic Product (GDP) growth projections to 6.4% for the current fiscal (FY27) from 6.7 per cent estimated earlier in March, as rising prices erode real incomes and dampen consumer spending, amid resilient capital expenditure. It said the US-Iran war will slow down the economy in the September and December quarters. However, it noted that domestic demand will be the main driver of growth, but lower imports in real terms imply positive contributions to growth from net external demand.

For FY28, Fitch expects GDP growth to pick up as the energy shock unwinds, with stronger consumer spending and investment translating to a growth rate of 6.7% for the full financial year, and ease towards trend growth of 6.4% in FY29. It said India's consumer price inflation has not yet risen significantly, but price pressures are mounting; wholesale prices rose by 8.3% y/y in April and CPI inflation to 3.5%. it said ‘We expect inflation to rise steadily over the months ahead, reaching 5.3% by the end of the (calendar) year. This reflects a combination of base effects and higher energy prices. Forecasts for below-average monsoon rains and the current heatwave in parts of India raise the risk of even stronger price rises’. It noted that ‘We do not expect a further, significant depreciation in the Indian rupee over the rest of the year’. It expects the exchange rate to average 97.50 to a dollar in the current fiscal.

Fitch has also lowered its 2026 forecast for global growth by 0.2 pp to 2.4% as world growth prospects have been hurt by the oil crisis prompted by the US-Iran war. The agency has revised its 2026 average price assumption for Brent crude oil to $87 per barrel (bbl), up from the $70/bbl estimated in March. The oil shock is a strong headwind to world growth, but its base case is far less severe than the pernicious oil shocks of the 1970s. Real oil prices reached $170/bbl in 1979 (measured in current prices) and Opec played a very different role then. Oil consumption as a share of world GDP has halved since 1980.

CNX Nifty touched high and low of 23,279.40 and 23,104.45, respectively. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Interglobe Aviation up by 3.95%, JIO Financial Services up by 2.33%, SBI up by 2.26%, Axis Bank up by 2.07% and ICICI Bank up by 2.06%. On the flip side, Titan Company down by 2.20%, ONGC down by 1.93%, NTPC down by 1.78%, Power Grid Corporation down by 1.65% and Eternal down by 1.15% were the top losers.

European markets were trading mostly in green; France’s CAC rose 82.61 points or 1% to 8,281.90 and Germany’s DAX gained 102.18 points or 0.41% to 24,718.40, while UK’s FTSE 100 decreased 25.39 points or 0.25% to 10,347.81.

Asian markets settled mostly higher on Tuesday, tracking Wall Street’s gains overnight as investors returned to artificial intelligence-linked names, while risk appetite improved after Israel and Iran halted attacks on each other following a warning from US President Donald Trump. Chinese shares rose, despite heightened US-China tensions after the Pentagon accused some of China’s biggest companies, including Alibaba, Baidu and BYD of supporting the Chinese military. Japanese shares gained, while the yen held near a one-month low against the dollar amid reports that the Bank of Japan will raise its short-term policy rate and consider halting bond tapering from April 2027 at its upcoming monetary policy meeting on June 15-16. Moreover, Seoul shares surged over 8% after data showed South Korea's economy expanded at a faster pace in the first quarterly than initially reported.