Background : War Tension
Last week, global markets were rattled due to rising tensions between Iran and Israel. The U.S. was also involved diplomatically and militarily, which created fear of escalation in the Middle East. This pushed crude oil prices up earlier in the week and raised concerns over inflation and global economic impact.
Such geopolitical events usually lead to volatility in stock markets, especially in emerging markets like India, which are sensitive to oil prices and foreign investment.
But Why Did Indian Markets Rise ?
Despite the war tension, Indian stock markets surged sharply on Friday due to a combination of domestic and international factors:
Easing Geopolitical Tension
U.S. President announced a pause in military action, which cooled off immediate war fears.
As a result, crude oil prices dropped by ~2%, easing inflation concerns in India (which imports most of its oil).
RBI Policy Boost
The Reserve Bank of India (RBI) eased loan provisioning norms for infrastructure projects.
This boosted investor confidence in banks and finance stocks, especially PSU banks like Power Finance Corp and REC.
Strong FII Inflows
With the U.S. Federal Reserve signaling possible rate cuts in 2025, global investors turned positive on emerging markets.
Foreign Institutional Investors (FIIs) started buying in Indian markets again.
