The Indian stock market benchmark indices, Sensex and Nifty 50, are likely to open flat on Thursday as optimism surrounding the US–Iran peace agreement offsets concerns arising from the US Federal Reserve’s overnight hawkish policy stance.

Asian markets traded higher, while the US stock market closed lower overnight after the US Federal Reserve indicated the possibility of further interest rate hikes later this year.

Moreover, on Wednesday, the Indian stock market advanced for the fourth straight session, supported by growing confidence in the US–Iran peace deal and a decline in crude oil prices, which boosted investor sentiment.

Domestic Market Recap

On Wednesday, Indian indices ended green:

• Sensex soared by 347.14 points (0.45%) to close at 77,155.62
• Nifty 50 moved up by 96.55 points (0.40%) to settle at 24,085.70

Gift Nifty

Gift Nifty was trading near 24,083, around 11 points lower than the previous Nifty futures close, hinting at a muted start for Indian markets.

Overnight Wall Street Performance

The US stock market closed lower after the US Federal Reserve kept its benchmark interest rate unchanged but signaled that it could raise rates later this year if inflation remains elevated. The Fed’s hawkish stance weighed on investor sentiment, prompting selling across major Wall Street indices.

• The Dow Jones Industrial Average slumped by 507.12 points (0.98%) to close at 51,492.55.
• S&P 500 was down by 91.25 points (1.21%), ending at 7.420.10.
• The Nasdaq Composite was lower by 354.69 points (1.34%), finishing at 26,021.66.

Crude Oil Prices

• Brent crude slumped by 1.12% to $78.66/barrel
• US West Texas Intermediate (WTI) crude was trading 1.28% lower at $75.81/barrel

Overnight Major Global Events Driving Sentiment

1. US–Iran Peace Deal: The United States and Iran published the text of an interim peace agreement signed by their presidents on Wednesday to formally end the conflict. According to Reuters, US President Donald Trump warned that Washington could resume military action and target Iranian officials if Tehran failed to comply with the agreement. Shehbaz Sharif confirmed that the deal, which both sides signed electronically, took effect immediately.
2. US Fed Policy: The Federal Reserve, under its new Chair Kevin Warsh, kept interest rates unchanged in the 3.50%–3.75% range. Updated quarterly projections showed that nine policymakers expect at least one rate hike by the end of 2026 as they seek to contain inflationary pressures.
3. US Retail Sales: US retail sales rose more than expected in May, highlighting resilient consumer demand. Retail sales increased 0.9% month-on-month after a revised 0.4% gain in April. 
4. Japanese Bond Yields: Japanese government bond yields moved higher after the Federal Reserve’s hawkish outlook fueled expectations that the Bank of Japan could tighten monetary policy sooner than anticipated. The benchmark 10-year JGB yield climbed 2 basis points to 2.620%, while the five-year yield edged up 0.5 basis point to 1.865%. The two-year yield remained unchanged at 1.385%.

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