Stock markets climbed in early trade on Friday after US President Donald Trump called off a military strike on Iran and hinted at a possible deal, easing geopolitical tensions that had rattled investors.
Market Performance
The BSE Sensex jumped over 200 points, while the NSE Nifty gained more than 60 points in early trading hours. The rally was broad-based, with banking, auto, and IT stocks leading the gains.
Global Cues
Asian markets also traded higher after Trump's comments. Japan's Nikkei rose 0.5%, and China's Shanghai Composite added 0.3%. The positive sentiment followed Trump's decision to call off a retaliatory strike on Iran after it shot down a US drone, saying such action would have caused disproportionate casualties.
Trump also hinted at a possible deal with Iran, stating that he is in no hurry to respond to the drone attack and that the US is ready to negotiate. This marked a sharp shift from his earlier aggressive stance, calming fears of a full-blown conflict in the Middle East.
Investor Sentiment
Analysts said the market's positive reaction reflects relief that the situation has not escalated into a war. However, they cautioned that tensions remain high and any fresh provocation could reverse gains.
“The market is pricing in a lower probability of a military conflict, but the underlying risk remains. Investors should watch for any further developments,” said a senior analyst.
Sectoral Trends
Banking stocks were among the top gainers, with the Nifty Bank index rising over 1%. Auto stocks also advanced on hopes of lower crude oil prices, which would reduce input costs. IT stocks continued their upward trend, supported by a weaker rupee.
Oil marketing companies gained as global crude prices eased on the back of reduced supply fears. Meanwhile, defense stocks slipped as the likelihood of increased military spending diminished.
Outlook
Market participants will now focus on the upcoming G20 summit, where Trump is expected to meet with Chinese President Xi Jinping to discuss trade issues. A positive outcome could further boost markets.
“The Iran situation is still fluid, but the immediate threat of war has receded. The focus now shifts to trade talks and domestic economic data,” said a fund manager.
