According to The Hindu BusinessLine analysis, Nifty 50 has emerged as one of the better-performing equity benchmarks during the ongoing West Asia conflict, with the index showing a relatively smaller loss of 3.7% during the war period. This outperformance was primarily driven by demand from domestic investors, particularly through the mutual fund route, which helped stocks recover from the lows recorded towards the end of March. The index currently trades at ₹24,196.75, as reported by The Hindu BusinessLine. On Thursday morning, the Nifty 50 opened 0.6% higher at 24,380.05 points, extending gains for the second consecutive session amid positive developments in US-Iran relations.
Market participants are hopeful that the US and Iran may extend their two-week ceasefire and hold a second round of talks to end the West Asia war, with reports suggesting the two countries have agreed in principle to extend the truce. As per The Associated Press, the original two-week period is due to end April 22, and senior Pakistani mediators have reached Tehran to keep prospects for further talks alive. Crude oil prices have fallen to around $94 per barrel, helping domestic indices gain momentum for the second session. GIFT Nifty April contracts traded slightly above 24,300 points, indicating the Nifty 50 index may open around 70 points higher. The India VIX volatility index was almost 4% lower at 17.9450, indicating that nervousness among investors has eased significantly.
S&P Global Ratings expects India's BBB investment grade sovereign rating to remain stable despite rising energy costs from the Iran war, though supply disruptions could impact corporate credit quality. The rating agency projects earnings of top 100 companies to drop by 15% to 20% in fiscal 2027 if energy costs remain elevated, which will increase debt-to-EBITDA ratios for large companies by 0.5 to 1 times of EBITDA. According to The Economic Times, refining and airlines are identified as the most vulnerable sectors, with cement, metals, and steel also facing risks due to energy import dependence. S&P has assumed oil prices at $85 per barrel in the current fiscal year, rising to $130 per barrel in the worst-case scenario.
S&P expects India's banks to operate in a risk-off mode, with credit growth likely weakening to 10% to 11% this fiscal from 12% to 13% last fiscal if the energy situation persists. As reported by The Economic Times, higher food and fuel costs could impact disposable incomes and bank credit to sectors like unsecured loans, affordable housing, and vehicle loans. The Reserve Bank of India may allow targeted restructuring to manage short-term cash flow stress for affected sectors. Excise duties make up about 10% of government revenues, which could weaken if fuel price support measures become structural, potentially challenging the government's fiscal deficit target.
The Nifty Metal sector emerged as the top performer, with all constituents trading higher in early trade, while the Nifty IT sector was the second-best performer, up over 1% with all constituents in the green. Information technology stocks contributed the most to Nifty 50's rise, with Infosys, Tech Mahindra, and Tata Consultancy Services up over 1%. Hindalco Industries was the top gainer in the Nifty 50 index, up nearly 3%, followed by metal stocks Tata Steel and JSW Steel, up almost 2%. Quick-commerce stocks also performed well, with Eternal in the Nifty 50 and Swiggy in the Nifty 500 gaining around 1%. Technical analysts expect the buying momentum in the market to continue in the near term, with intraday support for the Nifty 50 seen at 23,900-24,000 points and resistance expected near 24,500 points.
