Indian markets opened sharply higher on Tuesday, mirroring global markets as the US signalled a pause in the war with Iran.

Around 10:00 AM, the Nifty 50 was trading at 22,766.00, up 1.13%. Brent Crude started trading below the $100 mark for the first time in two weeks.

What led to the rally?

US President Donald Trump posted on social media that the US and Iran over the last two days have had “very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East”

Accordingly, he has instructed the Department of War to “postpone any and all military strikes against Iranian power plants and energy infrastructure for a five-day period, subject to the success of the ongoing meetings and discussions.”. 

US markets gained nearly 1,200 points initially, but half of those gains were pared after Iran denied any such talks.

This announcement came hours after Iran issued fresh and explicit threats in response to an earlier American ultimatum.

What should you do?

While Indian markets started stronger today, one has to see if the recovery is strong and sustained. The five-day ceasefire might be an early sign that talks could begin, bringing relief to global markets. However, the war has not ended yet; Iran has not officially confirmed a pause, and things remain uncertain.

Crude oil has fallen around 10%, which is a positive for India, as it could reduce inflation pressure and stabilize the Indian Rupee after its recent weakness.

FII activity is one of the key factors to watch. If selling continues, markets are likely to remain under pressure and vice versa.