Indian Shares Recover Modest Gains Amid Rupee Rebound and Geopolitical Tensions

Indian shares ended Thursday's choppy session with modest gains after reversing steep early losses, buoyed by a rebound in the Indian rupee and afternoon value buying. The benchmark BSE Sensex and NSE Nifty indices initially dropped around 2 percent at the open, influenced by heightened geopolitical tensions following U.S. President Donald Trump's address on the Middle East conflict. Trump's remarks, which suggested potential intensified military actions against Iran, led to a surge in oil prices and dollar strength, initially weighing on Indian markets. The afternoon saw a recovery as investors capitalized on lower levels, with the rupee surging over 200 paise to 92.89 against the U.S. dollar. This rebound was supported by the Reserve Bank of India's (RBI) intervention, including restrictions on rupee non-deliverable forwards and limits on banks' net open rupee positions. The Sensex closed up 0.25 percent at 73,319.55 after hitting an intraday low of 71,545.81, while the Nifty rose 0.15 percent to 22,713.10 following a low of 22,182.55. The market breadth on the BSE showed strength, with 2,668 shares rising compared to 1,559 decliners. IT stocks, banks, and financials led the afternoon rebound, with Bajaj Finance, HDFC Bank, TCS, Infosys, Tech Mahindra, and HCL Technologies rising between 1-3 percent. However, some prominent stocks like Sun Pharma, Asian Paints, and Eternal fell around 2 percent. The mid-cap index declined 0.2 percent, while the small-cap index closed marginally higher. The geopolitical tensions remain a key factor for market sentiment, with Iran's military warning of continued conflict and potential attacks on U.S. and Israeli forces. The RBI's measures to stabilize the rupee and manage foreign exchange risks are expected to influence investor behavior in the near term.