Gift Nifty Signals Strong Market Opening Driven by Cooling Crude Prices and FII Buying

Indian stock markets are likely to open strongly higher, supported by cooling crude oil prices and heavy buying by foreign portfolio investors. The Gift Nifty trading at 25,340 indicates a gap-up opening of over 300 points, with analysts expecting the positive market momentum to continue.

Motilal Oswal Financial Research noted that continued improvement in foreign portfolio investor sentiment, alongside easing geopolitical challenges, could help offset headwinds that have weighed on Indian markets over the past two years, potentially laying the foundation for a sustained rally.

Ponmudi R, CEO of Enrich Money, stated that Indian equities appear well positioned to extend their recent advance. A sustained moderation in crude oil prices and a revival in foreign portfolio inflows are providing a more supportive backdrop for domestic markets. WTI crude has continued to retreat, trading around $86 per barrel, while Brent has eased to the $91–92 range. This decline offers respite from concerns over elevated energy costs, imported inflation, and pressure on India’s external balances.

Foreign institutional flows have also emerged as a significant source of support. The market has witnessed a notable turnaround from sustained selling seen in October to consecutive sessions of aggressive net buying, helping reinforce the recent market recovery and improve risk appetite.

Meanwhile, a recent investor note from Carnelian Asset Management & Advisors titled “State of Indian Markets: Jambavan Moment” suggests the current environment presents an attractive opportunity for long-term investors. Of the 392 Nifty 500 companies that reported quarterly results, revenue grew 24 percent and profits increased 21 percent year-on-year, indicating improving earnings momentum across sectors.

Carnelian remains optimistic about Indian equity markets over the next two to three years, supported by improving earnings, domestic consumption, private investment, strong credit growth, and more reasonable valuations. Market valuations have cooled, with Nifty 50 and Nifty 500 trading at one-year forward P/E multiples of approximately 19x and 21x, down from 24x and 26x a year ago.

On the regulatory front, Manoj Purohit, Partner & Leader, Financial Services Tax at BDO India, noted that expectations of a broader overhaul have gathered pace. Industry expectations center around abolishing the current 12.5 percent long-term capital gains tax on foreign investors’ equity investments to reduce tax costs. Industry bodies have similarly advocated restoring the LTCG exemption on listed securities and enhancing tax certainty to improve market liquidity and attract long-term foreign investment.

Meanwhile, equities across broader Asian stock markets traded mixed and hovered around the flat line.

"The alignment of cooling crude prices and returning foreign institutional inflows creates a favorable short-term setup for the domestic equity markets. Beyond the immediate market rebound, the improvement in corporate earnings and more rationalized valuations point toward healthy fundamental backing for long-term investors in the Indian ecosystem." — Dr. Shishir Gupta, Founder & CEO, StartupLanes