The Indian stock market continued its upward momentum for the third consecutive session on Thursday, June 26, 2025, buoyed by a mix of global and domestic tailwinds. Investor sentiment was lifted by easing geopolitical tensions in the Middle East, a sharp drop in crude oil prices, and a weaker US Dollar, all of which are encouraging foreign inflows into India’s equity markets.
🔼 Nifty & Sensex Hit Multi-Month Highs
The Nifty 50 surged 285 points (1.10%) to reach a 9-month high of 25,529, while the Sensex jumped 808 points (1%) to 83,689, a level last seen in October 2024. Both benchmarks are now just 2.5% shy of their all-time highs recorded in September.
🚀 What’s Fueling the Rally?
1. Middle East Tensions Ease
Markets breathed a sigh of relief as a fragile ceasefire between Israel and Iran held for the second day. The pause comes after nearly two weeks of escalating conflict that began with Israel’s “Operation Rising Lion” on June 13 and Iran’s retaliatory “Operation True Promise 3.”
US President Donald Trump confirmed upcoming talks between US and Iranian officials, boosting hopes for a longer-term de-escalation. This geopolitical calm is reducing global market jitters, supporting risk-on trades.
2. US Dollar Index at 3-Year Low
The US Dollar Index tumbled to 97, its lowest level in three years, following President Trump’s harsh criticism of Fed Chair Jerome Powell, whom he labeled a “numbskull” and “fool.” Trump has been pushing for rate cuts to ease government borrowing costs and is reportedly considering replacing Powell as early as September or October with a more dovish candidate.
A weaker dollar generally benefits emerging markets like India, as it makes rupee-denominated assets more attractive to global investors.
3. Growing Expectations of US Rate Cuts
Although Powell maintained a cautious tone in his recent Congressional testimony, markets are increasingly pricing in potential rate cuts. This shift comes amid disappointing consumer confidence data, labor market concerns, and persistent trade uncertainties.
Investors are now closely watching key economic data, including:
- Final Q1 GDP numbers
- Weekly jobless claims
- Friday’s PCE inflation data
Any signs of economic softening could nudge the Fed toward a more accommodative stance.
🇮🇳 Domestic Factors Supporting Indian Markets
Back home, strong participation from domestic institutional investors and growing optimism about corporate earnings for Q1 FY26 are adding fuel to the rally. Market watchers are hopeful that the upcoming earnings season will reflect resilience across key sectors.
📌 Final Thoughts
The ongoing rally in Indian equities is a result of both global tailwinds and domestic confidence. With geopolitical tensions cooling and rate cut expectations rising, foreign investors are eyeing India as a stable, high-growth destination.
However, market sentiment remains sensitive to global developments. Investors should keep an eye on upcoming US economic data and geopolitical headlines that could sway momentum in either direction.
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