- Indian markets may open higher on Wednesday due to positive Middle East conflict developments
- US and Iran reportedly preparing for second round of peace talks to ease tensions
- US proposes a 20-year freeze on Iran's uranium enrichment, Tehran offers five years
Following key developments in the past 36 hours or so, Indian markets may witness a gap up open in trade on Wednesday, even as GIFT Nifty trade flat.
This is largely on the back of key developments in the Middle East conflict, particularly surrounding media reports of the US and Iran preparing for a second round of peace talks. This will reflect positively on the market, as any potential agreement could go a long way in de-escalating the conflict.
Meanwhile, the US has also proposed a 20-year freeze on Iran's uranium enrichment proposal - a key clause that was put forth by the Middle East nation during the initial round of peace talks.
While US hasn't agreed to the immediate enrichment proposal, it is ready to issue a 20-year freeze, whereas Tehran said it could only agree to a five-year sanction.
Another positive cue surrounding the Iran war is the Strait of Hormuz, where 20 commercial ships have passed in the last 24 hours, signalling a potential softening of stance from Iran and the beginning of the end for the blockade that has jolted global energy markets.
The GIFT Nifty is currently trading flat. However, the index is trading above 24,200, which is significantly higher than Nifty's Monday close of 23,800.
Harshal Dasani, Business Head at INVAsset PMS, believes the recent cues heavily favour the Indian bulls, especially keeping in mind how the US markets have risen overnight.
"The global setup overnight couldn't be more conducive for Indian bulls. The Nasdaq surging 1.81% to 25,842 and the Dow adding 0.66% to close near 48,536 tells us that risk appetite is firmly back on Wall Street — and that sentiment almost always finds its way to Dalal Street by morning.
"More telling is the KOSPI's near 3% rally, which signals that Asian institutional money is already repositioning into emerging markets. When you combine a strong Wall Street close with an Asia that's largely in the green and crude retreating — WTI is down 1.15% to $91 — the conditions for a meaningful gap-up in Nifty are firmly in place. The question for traders today isn't whether we open higher, but how much of that opening premium sustains through the session," he said.
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