Bulls were positioning for a 500-600 point rally in the benchmark Nifty50 early next week, with traders betting that a peace deal in West Asia and a sentimental lift from a potential Bharatiya Janata Party victory in the West Bengal state elections could keep the market bid. Oil prices, which had briefly spiked to a four-year high of $126 per barrel on Thursday, later reversed and the broader risk mood improved as crude fell another 5% on Friday to settle at $108.17 after Iran proposed a further round of peace talks.
The move came after a volatile week in which the fear gauge India Vix jumped by less than 6% to 18.46 on Thursday, a moderate rise that Rajesh Palviya said reflected market optimism despite the oil spike. On the same day, the Nifty closed at 23,997.55 after recovering 8% from its 2 April low of 22,182.55, but it remains well below the 25,178.65 level it touched on 27 February before hostilities began on 28 February.
Sanjeev Prasad said he was pencilling in an average Brent price of $85 a barrel this fiscal year on hopes of a peace deal in West Asia by mid-May. He said that would keep the current account deficit at 2% of GDP, while oil averaging $100 or more in the event of a prolonged impasse or escalation would push the deficit to 2.6% of GDP and create a more adverse hit on macros. The market’s reaction underscored how tightly Indian assets are now tied to every turn in the conflict, with oil serving as the key macro variable because of its pull on inflation, the current account and sentiment.
The uncertainty has already left its mark. On 9 March, at the height of hostilities, India Vix spiked 17.51% to 23.36 while crude surged to $120. The US and Iran reached a ceasefire on 8 April, and the fighting did not resume after that, but the path lower in oil has not been smooth: Thursday brought a 7% intraday jump before the reversal, and Friday’s decline took crude to $108.17. Indian markets were closed on Friday for Maharashtra Day, which means the next trading session will open with both the oil drop and the latest peace-talk headlines still fresh.
Options positioning also pointed to renewed confidence. Nifty weekly options expiring on 5 May saw heavy buying in the 24000 call, with open interest jumping 142% to 79,314 contracts. The contract closed 33% above its volume weighted average price on Thursday at ₹221.5 a share. Sudhir Joshi said the market would try to rally to 24500-24600 early next week if there were no negative surprises, a view that fits the broader squeeze higher from the recent low but still leaves the index short of its February peak. The answer to whether the rally extends now hinges on one thing: whether peace talks keep pushing oil lower, or whether the market is forced to price in another shock.