Oil Spikes and Fed Loom: Markets Cautious as India Rallies

Global stock markets kicked off the week with a cautious tone on Monday, June 16, 2025, as investors digested mounting geopolitical risks and awaited a pivotal U.S. Federal Reserve decision. Tensions between Israel and Iran have pushed crude oil prices sharply higher, reigniting fears of inflation and economic strain, particularly for energy-importing nations like India.

Indian Markets Rally Despite Global Caution

Despite global headwinds, Indian equity benchmarks surged early in the session. The Sensex jumped over 650 points and the Nifty traded above 24,900, buoyed by gains in IT and financial stocks. This positive momentum reflects strong domestic institutional support even as foreign institutional investors remain net sellers.

Top Gainers

• TCS, L&T, HCLTech, and Bharti Airtel led the rally, with IT services showing strength amid growing global demand and digital transformation themes.
• Financials also saw buying interest, further supported by consistent Domestic Institutional Investor (DII) inflows for the 19th consecutive session.

Top Laggards

• On the downside, Tata Motors, Sun Pharma, and SBI registered losses, with sector rotation and company-specific news weighing on sentiment.

The Indian Rupee continued to weaken against the U.S. dollar, pressured by rising oil prices and sustained FII outflows, sparking concerns about imported inflation and earnings pressure on companies with high foreign currency exposure.

Key Stock Updates

• Adani Enterprises (ADANIENT) clarified that its Haifa Port operations in Israel remain unaffected despite regional conflict escalation.
• Sun Pharma saw pressure after the U.S. FDA issued 8 observations following its inspection of the Halol facility.
• Bajaj Finance (BAJFINANCE) shares are in focus ahead of the ex-bonus (4:1) and ex-stock split (face value from ₹2 to ₹1) taking effect on June 17.
• NTPC announced the commencement of commercial operations at a new 660 MW unit in the North Karanpura project.
• ITC completed its ₹400 crore acquisition of Sresta Natural Bioproducts, expanding into the organic food segment.
• Vedanta (VEDL) will consider an interim dividend for FY26 in a board meeting scheduled for June 18.
• Nazara Technologies (NAZARA) saw selling pressure after major investor Rekha Jhunjhunwala offloaded a significant stake.

Global Markets and Outlook

U.S. markets ended lower last Friday, with futures for the Dow, Nasdaq, and S&P 500 also in the red. Investor sentiment remains fragile as oil spikes and geopolitical risks increase. European indices followed suit, closing the previous week with losses amid similar concerns.

In Asia, trading was subdued with most markets moving sideways. One notable exception was South Korea, where stocks hit a 3.5-year high, driven by enthusiasm for AI-related companies.

What to Watch This Week

• U.S. Federal Reserve Policy Decision: Markets await clarity on the timing and pace of interest rate cuts amid mixed economic data.
• Middle East Conflict: The Israel-Iran situation remains volatile and could continue influencing oil markets and investor sentiment globally.
• Institutional Activity: DII support is cushioning Indian markets for now, but FII trends remain a risk factor.
• Crude Oil Prices: Any further escalation in oil prices may pressure inflation and current accounts.
• Currency Trends: The weakening Rupee will be monitored closely, especially with potential ramifications for imported inflation and dollar-denominated debt.