From Geo-Politics to Market Swings: A Month of High Volatility
Performance recaps last month and current month
The Indian stock market has witnessed consolidation, volatility, resilience and mild uptrend last month and current month despite many uncertainties and geo political events. Nifty has rallied 1.7% in May and 2% so far in June month. The rally was broad based and many factors contributed to this rally despite many geo political events which also caused volatility.
India and Pakistan conflicts in the month of May have been explained in detail in previous month outlook. The ceasefire news triggered a big rally in the stock market on 12th may of more than 900 points in nifty i.e. 3.8%, one of the single biggest single day gains in recent times. The rally post this could not sustain due to global geo political events. The major event being Israel & Iran conflict in which US also joined subsequently triggering a major escalation and threat to the world peace explained below.
The Iran–Israel conflict escalated sharply in June 2025, following suspected Israeli airstrikes on Iranian nuclear facilities near Natanz on June 13, 2025. Israel launched a major air assault dubbed Operation Rising Lion, striking the Natanz and Fordow nuclear facilities, military sites across Tehran, Isfahan, Tabriz, and missile infrastructure—deploying over 200 jets and 330 munitions in five attack waves. Israel launched strikes as it suspected Iran had resumed uranium enrichment at high levels and was nearing weapon-grade capability, which Israel viewed as an existential threat. Iran responded with a barrage of missile attacks on Israeli military bases on June 14 and afterwards. Iran sent about 200 ballistic missiles and over 100 drones targeting cities including Tel Aviv, Ramat Gan, Beersheba, Rehovot, and Jerusalem The U.S., citing security concerns and its defence commitments launched Operation Midnight Hammer, utilizing B‑2 bombers and Tomahawk missiles to strike Fordow, Natanz, and Isfahan nuclear sites—marking its first direct military action in the conflict aiming to cripple Iran’s retaliatory capacity. In retaliation, Iran launched missiles at the U.S. Al Udeid Air Base in Qatar on June 23, though most were intercepted with no reported casualties. Mounting international pressure—including mediation from Qatar and behind-the-scenes talks involving former U.S. President Trump—led to a mutually agreed ceasefire on June 24. Although missile exchanges have halted for now, the situation remains tense, with Iran’s parliament recently voting to potentially block the Strait of Hormuz, posing risks to global oil supply. Both nations remain on high alert, with the U.S. maintaining a strong military presence in the region.
The above event has caused volatility in crude prices, commodity prices and equity markets as well. The Indian market has shown strong resilience under these circumstances also and nifty bounced back from support of 24500. Following stability in the geo political situation, market bounced back sharply and crossed strong resistance of 25000. Other factors contributing to this rally are heavy DII inflows and net positive FII inflows, global markets rally, recent drop in crude prices, favourable RBI policy with recent rate cuts and recovery after steep correction in past few months. As have been mentioned in few previous outlooks, the geo-political uncertainty has increased significantly and may continue to be a risk for all the markets and to be closely tracked.
Sectoral performance
The markets witnessed broad based uptrend across sectors and market cap in last 2 months as well. Star performing sectors of May month are rally of Media 13%, Realty, Metals & PSU 7% each with smallcap rally of 9% and midcap 6%. Laggards of May month are FMCG -2%, Pharma -1% and Banking 1%. Similarly best performing sectors this month are Realty 7% and IT 5%, others have moderately performed and laggards for the month are PSUs, metal and FMCG. The sector rotation may continue based on valuations, global markets performance, events and cyclical nature. It is better to remain diversified across sectors and market caps to minimize risk, bring down volatility and stabilize returns.
Global Market outlook including commodity
The global economy is facing challenges like steady growth, lingering inflation, uncertain policy environments, tariff trade war, geo political events. The economies are interconnected and inter dependent than ever and one event may have many cascading impact. Hence, the volatility may continue despite resilience shown by the markets. Gold & Silver have resumed uptrend after pause and minor corrections and still remained the most preferred asset class. However stellar rally is followed by time and price corrections, still adding them and prudent rebalancing in the portfolio diversify risk and offer stability. Gold is currently trading at Rs 97k/ 10 gm and Silver at Rs 106k/ 1kg
Outlook for the Indian Market
Investment behaviour, discipline, many other key lessons, Investment strategies have been shared in detail in previous months outlooks and can be referred again as the playbook for any kind of market situation. Patience and disciplined investing has always rewarded Investors in the long run. The outlook remains positive for this month and the year despite many uncertainties. Increasing interdependence of global markets and geo political risks remain major headwind to track. Corporate earnings in coming month may also provide further direction to the market. Further, consult your investment advisor for prudent financial practices.
Fundamental outlook: Indian market witnessed recovery as mentioned and Nifty is just 4% away from all time high of 26277. Some Index like Bank nifty is already at lifetime high, hence Nifty may likely touch life time high soon within this year. Nifty is reasonably valued at current levels based on the earnings growth and other factors. There is consolidation and volatility expected around this level.
Technical outlook: Indian market is in uptrend based on technical parameters. Nifty is trading above all key moving averages. Nifty is trading at monthly RSI of 66 and weekly RSI of 61 which indicates uptrend. Nifty immediate support seen at 24450, major support at 24000, immediate resistance seen at 25450 and major resistance at 25800.
