Indian equity benchmarks are set to open higher on Thursday, driven by short-covering activity following a sharp selloff in the previous session.
The Gift Nifty, a key indicator for the Indian market's opening direction, was trading around the 23,980 level, reflecting a premium of nearly 68 points over Nifty futures.
This technical setup suggests a positive start for the Sensex and Nifty 50, even as investor sentiment remains cautious due to renewed geopolitical friction between the US and Iran.
The market's attempt to stabilize comes after a period of heightened volatility linked to shipping risks in the Strait of Hormuz.
Earlier this week, reports indicated that the strait had returned to full conflict conditions, sending oil prices surging and weighing on global risk assets. Despite these headwinds, the immediate technical rebound in Indian indices highlights a divergence between short-term trading flows and broader macroeconomic concerns.
Investors are balancing the potential for a technical bounce against the backdrop of escalating diplomatic tensions.
Oman's diplomatic opacity regarding Hormuz fees has further deepened uncertainty around shipping risks, adding a layer of complexity to the trade route outlook. Meanwhile, Iran has threatened a forceful response to tankers deviating from approved routes, underscoring the persistent geopolitical premium in energy markets.
While the initial session points to a recovery, the sustainability of the rally will depend on whether geopolitical developments ease or intensify.