1. Indian Stock Market:
- Recent Downturn: The Indian stock market, including the Sensex and Nifty 50, experienced significant losses over the past couple of sessions, mirroring a global sell-off.
- Key Factors for Decline:
- Escalating Israel-Iran Conflict: Tensions in the Middle East, with Israel’s military strikes on Iran, have led to fears of a wider conflict and disruption in oil-rich regions, causing global market instability. Crude oil prices have spiked significantly due to this.
- US Trade Tensions: Renewed tariff threats by US President Trump are fueling concerns about a global trade war, adding to investor uncertainty.
- FII Outflows: Erratic foreign institutional investor (FII) fund flows have also contributed to the overall uncertainty in the Indian market.
- Performance:
- On June 13, 2025 (Friday’s close), the Sensex settled 573 points lower at 81,118.60, and the Nifty 50 was down 169 points at 24,718.60.
- Earlier in the week, on June 12, the Sensex dropped over 800 points and the Nifty fell below 24,900.
- Expert Outlook: Analysts are advising investors to remain calm, avoid panic selling, and maintain diversified portfolios. They suggest that increased volatility can present buying opportunities for quality stocks.
2. Forex Market (India):
- Rupee Depreciation: The Indian Rupee has opened at a two-month low against the US Dollar, largely due to the escalating Israel-Iran tensions. It was trading around 86.08 against the USD.
- Forex Reserves Rise: India’s foreign exchange reserves saw a significant boost, rising by $5.17 billion to reach $696.66 billion for the week ending June 6. This increase follows a previous dip and reflects the Reserve Bank of India’s (RBI) efforts to maintain orderly market conditions.
- RBI Intervention: The RBI actively monitors foreign exchange markets and intervenes through liquidity management (including selling dollars) to prevent steep depreciation in the rupee and contain excessive volatility.
3. Bond Market (India):
- Yield Gap Narrows: The yield gap between India’s 10-year government bond and the US 10-year Treasury note has narrowed to approximately 1.88 percentage points. This is a significant decrease from 6.35 percentage points in 2014.
- Factors Influencing Yields: This narrowing is attributed to easing inflation in India, a dovish monetary policy stance from the RBI, and improving macroeconomic fundamentals.
- FII Interest: A narrower yield gap might make Indian government securities less attractive to foreign institutional investors seeking higher risk-adjusted returns elsewhere, potentially leading to lower FII inflows or elevated outflows unless the gap widens again. However, India’s stable economy and robust forex reserves are seen as cushions.
- Outlook: Experts anticipate another 25 basis point repo rate cut in an upcoming MPC meeting, with the yield curve expected to remain steep.
4. Cryptocurrency Market (India & Global):
- Bitcoin Volatility: Bitcoin prices have tumbled, slipping below $103,000 to $105,000 levels, as the Israel-Iran conflict sparks a global “risk-off” mood.
- Altcoin Performance: While Bitcoin struggles, some altcoins like Fair and Free (FAIR3), Derive (DRV), and Kled AI (KLED) are experiencing significant gains. MAP Protocol (MAPO) surged 100%, and Useless Coin skyrocketed over 1,245%.
- Mining Difficulty: Bitcoin mining difficulty has seen a minor decrease of 0.45%.
- Stablecoin Growth: The total market capitalization of stablecoins has shown modest growth, increasing by 0.63% over the past week.
- Notable News: Donald Trump has disclosed significant income from his cryptocurrency venture, World Liberty Financial, which has generated $57.4 million.
Overall Market Sentiment:
The global financial markets are currently driven by geopolitical tensions in the Middle East and concerns over trade policies, leading to increased volatility and a cautious sentiment among investors. Investors are closely watching central bank actions and economic indicators for further direction.