Nifty scaled 5-week high on hopes of less hawkish Fed/RBI and progress on the Iran deal; what’s next?

 


·       Contrary to earlier expectations, after June’s soft US job report, the Fed may be on hold till Dec '26 to bring down transitory, hotter inflation without causing a hard landing.

·       The RBI governor sounded less hawkish, as the RBI may be on hold till at least Dec '26, contrary to any hike.

·       Trump’s random comments about the progress of the Iran deal (at gunpoint) also helped risk trade, but growing AI bubble concerns may be an issue going forward.

India’s benchmark stock index Nifty scaled to almost 24400, at a 5-week high Friday, July 3, 2025, and edged up +0.4% on fading concern of Fed & RBI rate hikes. This comes after oil falls due to the progress of the US-Iran peace deal, and the latest June US job data comes much softer than expected. Overall, contrary to earlier market expectations of a Fed rate hike by December '26, the market is now expecting the Fed may be on hold due to transitory hotter inflation and a stable but not solid US job/labor market. Nifty gained almost 2% in the first three trading days of July after 1.35% gains in June as oil stumbled to almost $68 pre-Iran war levels amid progress of the US-Iran MOU/deal and gradual normalization of the Strait of Hormuz (SOH) despite the overall nature of the fragile ceasefire.

Overall, the situation between the US and Iran as of early Friday, July 3, 2026, is characterized by a fragile pause in active hostilities as Iran prepares for the massive funeral of its former Supreme Leader Khamenei, who was killed in an early US-Israeli strike in February. While high-level & ongoing technical talks in Doha have shown "positive progress," military tensions remain extreme in the Strait of Hormuz and southern Lebanon. Israel is not ready to withdraw from Southern Lebanon, while Iran is not ready to accept Trump’s claim for full control of the Strait of Hormuz (SOH). Both the US and Iran agreed to a "stand down" following weekend skirmishes in Kuwait, Bahrain, and Iran. Iran warned vessels to follow IRGC routes; oil prices have fallen to pre-war levels. Negotiators in Doha have agreed on a "communication channel" to report breaches of the interim deal.

Nifty was also boosted by fading concern of tighter monetary policy and rate hikes after RBI Governor Malhotra sounded less hawkish in an interview. On Wednesday, June 24, 2026, soft-spoken & publicity-shy RBI Governor Malhotra said in a rare interview (an act of jawboning) it would be premature to talk about a rate hike.

Market impact

Overall, Nifty gained almost +1.05% for the week, led by IT (bargain hunting after steep correction over the last few weeks), metals, realty, pharma/healthcare, and automobiles, while dragged by banks & financials (growing issues of governance; liquidity (higher lending growths than deposits may lead to lower NIM/NII); and also NPA/write-offs by the SC─over ₹12T for the last 10 years' issues), FMCG, energy, and oil & gas.

Top 10 Weekly Gainers (Nifty)

·       HCL Tech: +6.19%

·       Tech Mahindra: +5.85%

·       Infosys: +5.64%

·       TCS: +4.31%

·       DRL: +3.20

·       Shriram Finance: +3.05%

·       Tata Steel: +2.80%

·       Sun Pharma: +2.45%

·       Apollo Hospitals: +2.10%

·       Bajaj Finserv: +1.95% (upbeat report card)

Bottom 10 Weekly Losers (Nifty)

·       IndiGo (InterGlobe): -4.8% (volatile ATF prices)

·       Eicher Motors: -4.6%

·       Bank of Baroda: -4.2% ($600 million out-of-court settlement related to the NMC Healthcare case)

·       Larsen & Toubro: -3.7% (lingering Middle East tensions amid fragile US-Iran ceasefire)

·       Reliance Industries: -3.5% (lower GRM as oil falls and concern of higher CAPEX)

·       HDFC Life: -3.5%

·       SBI: -2.4% (Dragged by PSU index weakness).

·       Tata Consumer: -2.1%

·       Axis Bank: -1.8%

·       Kotak Mahindra Bank: -1.5% (may buy out Deutsche Bank India operations—concern of higher CAPEX)

Conclusions: Nifty ~25000 intermediate/cycle top?

At around ₹1000 estimated Nifty EPS (w/o considering the bonus effect of key index constituents like RIL and HDFC Bank) for FY27 and 20/22-25/27 as the base/best/bubble case scenario, the fair value of Nifty may be around ₹2000/₹22000-₹25000/₹27000 at present. Looking ahead, all focus of the market would be not only on the Trump/Iran war and RBI/Fed but also on Q1 FY '27 earnings & guidance trajectory. Investors may also focus on Indian IT service providers' plans/commentaries on AI. Although India is lagging in AI innovation, going ahead, we may see an AI infra boom (like data centers) in India. Also, Indian IT service providers may have to provide AI training (prompts/codes) to their US/EU counterparts in the future. Nifty may continue to hover between the narrow 22000 and 25000 zones.

Technical outlook: Gift Nifty and USDINR

Looking ahead, whatever may be the narrative, technically Gift Nifty Future (CMP: 24350) now has to sustain over 24600 for a further rally to 24900-25000* and only sustain above 25050, further to 25250/500*-25800-26100/26500* in the coming days; otherwise, sustaining below 24550-500, Gift Nifty may fall to 24250/24200-24000/23700 and 23200/23100 and further 23000/22500-22300/22000-21800* in the coming days (base-best case scenario).


Similarly, USDINR (95.20) now has to sustain over 95.50-96.00 for a rally to 97.00-97.50, and only sustaining above that may scale 100/105-107/110 in the coming days; otherwise, sustaining below 95.00-93.50, it may again fall to 93.00*/92.50 in the coming days.

 


Disclaimer:


• I have no position or plan to have any position in the above-mentioned financial instruments/assets within the next 72 hours.

• I am an NSE-certified Level-2 market professional—NCMP (NCFM Financial Analyst—Fundamental + Technical)—and not a SEBI/SEC-registered investment advisor. 

The article is purely educational and not a proxy for any trading/investment signal/advice.

• Please always consult with your personal financial advisor and do your own due diligence before any investment/trading in the capital market.

• I am a professional analyst, signal provider, and content writer with over ten years of experience.

• All views expressed in the blog are strictly personal and may not align with any organization with which I may be associated.


• If you want to support independent & professional market analytics, you may contribute to my PayPal A/C: asisjpg@gmail.com

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