Indian Markets Set for Gap-Up Open on US-Iran Peace Hopes

Indian Markets Buoyed by Global Optimism

Indian equity markets are anticipated to open with a significant gap-up on Friday, tracking a robust rally across global markets. This surge in investor sentiment follows heightened hopes for a US-Iran peace deal, which gained traction after US President Donald Trump canceled planned military strikes against Iran.

Globally, US markets closed sharply higher on Thursday, with Asian markets continuing the positive trend on Friday morning. Domestically, investors will closely monitor India’s retail inflation data, scheduled for release later in the day, for further market direction.

Economic Projections and Credit Dynamics

The World Bank projects India to maintain its position as the world’s fastest-growing major economy, with an estimated expansion of 6.6 percent in fiscal year 2026-27. This marks a moderation from the 7.7 percent growth recorded in the previous year.

Meanwhile, data from the Reserve Bank of India (RBI) indicates a robust 17.44 percent year-on-year growth in bank credit during May. This marks the ninth consecutive month of double-digit expansion, reflecting sustained demand for loans from both retail and corporate sectors.

Trade, Policy, and Investment Landscape

Discussions regarding the implementation of the India-EFTA free trade agreement are expected to feature prominently during Commerce and Industry Minister Piyush Goyal’s visit to Switzerland on June 12. This visit aims to address any issues arising from the pact.

Finance Minister Nirmala Sitharaman emphasized the critical need for strengthened multilateral cooperation to address challenges posed by ongoing global conflicts. She highlighted that the adverse impacts of such conflicts disproportionately affect developing nations and the Global South, necessitating coordinated global action.

Union Textiles Minister Giriraj Singh outlined an ambitious target for India’s textile market, aiming to expand its size, encompassing both domestic and export markets, to Rs 33 lakh crore by 2030-31. This represents a substantial increase from the current market size of approximately Rs 16 lakh crore.

The Reserve Bank of India’s latest figures reveal a significant decline in India’s total outward foreign direct investment (FDI) commitments. These commitments fell by 49.02 percent month-on-month in May 2026, dropping to $4.49 billion from $8.84 billion recorded in April 2026.

BMI, a Fitch group company, forecasts a slowdown in India’s Gross Domestic Product (GDP) growth to 6.6 percent in FY27, down from 7.7 percent in FY26. This moderation is attributed to anticipated weaker investments and consumption growth, alongside potential trade disruptions stemming from the West Asia crisis.

The Ministry of Finance reported a significant milestone for the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0. The total number of guarantees issued under the scheme has surpassed 1 lakh, reaching 1,06,549 as of June 9, 2026, with the total guarantee amount exceeding Rs 48,484.26 crore.

Global Cues and Previous Day’s Performance

The rally in global markets was significantly influenced by US President Donald Trump’s decision to call off scheduled strikes on Iran, stating that the U.S. is poised to sign a deal with the country. This development provided a strong boost to US markets on Thursday, subsequently lifting Asian markets into positive territory on Friday.

Conversely, Indian equity benchmarks concluded a volatile trading session on Thursday with a downward trend. Investors remained cautious amidst escalating geopolitical tensions in West Asia following recent military actions by the United States against Iran. Unabated foreign fund outflows and a spike in US inflation also contributed to the muted trading sentiment. The BSE Sensex closed down 150.63 points (0.20%) at 73,832.55, and the CNX Nifty declined by 53.35 points (0.23%) to 23,161.60.