Markets Set for Muted Open After Strong Close on Wednesday as Investors Adopt Caution Over Iran Response 

Mumbai, May 7: Indian equity markets are likely to open marginally weak on Thursday as investors adopt a cautious wait-and-watch stance, with sentiment balanced between optimism over a potential US-Iran peace deal and lingering uncertainty over whether an agreement will actually materialise.  

The mood on Dalal Street is one of careful restraint rather than outright pessimism Iran has confirmed it is reviewing a US peace proposal, with an Iranian foreign ministry spokesperson cited by Iran’s ISNA news agency saying Tehran would convey its response to mediators, likely by Thursday.  

Gift Nifty 

Gift Nifty futures were trading at 24,457.50 as of 7:54 am on May 7, down 98.50 points or 0.40% from the previous close, indicating a gap-down opening for the Nifty 50 on the NSE. The contract being tracked is the May 26, 2026 expiry. The negative reading suggests the benchmark index could open somewhere around the 24,230–24,250 zone, pulling back from Wednesday’s strong close of 24,330.95. The decline in Gift Nifty reflects the overnight uncertainty around the Iran deal rather than any broad deterioration in global risk appetite. 

Silver Lining: Asian Markets and US Close 

Despite the Gift Nifty’s red signal, there is a strong possibility that Indian markets may pare early losses or even turn positive through the session, given the decidedly upbeat backdrop from both Asia and the US overnight. Asian markets are trading firmly in the green on Thursday morning with Japan’s Nikkei 225 surging over 5.5%, Hang Seng up 1.55%, and most other regional indices posting solid gains suggesting that global investors are broadly sanguine about the trajectory of US-Iran negotiations. US markets, meanwhile, had a stellar close on Wednesday, with the Nasdaq Composite surging over 2% and the Dow Jones crossing the 49,900 mark, sending a strong positive signal for risk assets globally. 

Middle East: Iran Reviews US Proposal 

Iran confirmed on Wednesday that it is reviewing a US peace proposal to end the war, with a foreign ministry spokesperson cited by Iran’s ISNA news agency confirming that Tehran would convey its response to mediators, with the reply expected to be handed over on Thursday. A Pakistani source and another source briefed on the mediation said an agreement was close on a one-page memorandum, which would kick off discussions to unblock the Strait of Hormuz, lift US sanctions on Iran, and impose curbs on Iran’s nuclear program. US President Donald Trump said he believed Iran wanted a deal, stating: “They want to make a deal. We’ve had very good talks over the last 24 hours, and it’s very possible that we’ll make a deal.” However, a senior Iranian lawmaker described the US proposal as more of a wish list than a serious plan, and Trump separately said it was “too soon” for face-to-face talks with Tehran, adding a note of caution that dampened some of the earlier optimism. 

Asian Markets 

Asian markets were broadly and strongly higher on Thursday morning, taking their cue from Wednesday’s Wall Street surge and the continuing optimism over a potential US-Iran peace deal that could unlock the Strait of Hormuz. Japan’s Nikkei 225 led the regional charge with a spectacular gain of 5.58%, rising 3,321 points to 62,834.58 the index’s strongest single-session advance in months while South Korea’s KSE 100 was not far behind, surging 4.23% or 6,962 points to 1,71,704.76. Hong Kong’s Hang Seng Index advanced 1.55% to 26,618.99, Thailand’s SET rose 1.80% to 1,516.91, Malaysia’s KLCI gained 1.04%, and Vietnam’s HNX 30 climbed 1.25% to 534.39, marking a complete reversal from the prior session’s minor decline. Australia’s S&P ASX All Ordinaries added 0.94% to 9,101.20, Indonesia’s JSX Composite rose 0.50% to 7,092.47, and Shanghai’s SE Composite edged up 0.19% to 4,168.21, making Thursday morning one of the strongest sessions for the Asia-Pacific region in recent weeks. 

US Markets 

All major US equity indices closed strongly higher on Wednesday, with the Nasdaq Composite leading the pack with a gain of 2.02% or 512 points to close at 25,838.94, while the S&P 500 rose 1.46% to 7,365.12 and the Dow Jones Industrial Average surged 1.24% or 612 points to close above the psychologically significant 49,900 mark at 49,910.59. The NYSE Composite gained 1.20% to 23,284.39, Canada’s S&P/TSX Composite advanced 1.24% to 33,981.82, and Mexico’s S&P/BMV IPC climbed 1.84% to 69,855.23, as the Iran deal optimism and strong corporate earnings momentum drove a broad-based rally across the Americas. 

Oil Prices 

Crude oil prices rebounded modestly in early Asian trade on Thursday, recovering a fraction of Wednesday’s sharp losses, as investors weighed the evolving prospects of a Middle East peace deal. Brent crude futures rose 88 cents or 0.9% to $102.15 per barrel by 12:32 am GMT, while US West Texas Intermediate gained $1.12 or 1.2% to $96.20 per barrel, after both benchmarks had tumbled more than 7% on Wednesday  hitting two-week lows on ceasefire optimism before partially paring losses when Trump said face-to-face talks were “too soon”.  

Wednesday’s Close: Sensex, Nifty 

Indian equity benchmarks posted a strong recovery on Wednesday, with the BSE Sensex surging 940.73 points or 1.22% to close at 77,958.52 and the Nifty 50 rising 298.15 points or 1.24% to settle at 24,330.95, reclaiming the 24,300 mark in a broad-based rebound led by banking, auto, and rate-sensitive stocks. The session was not without volatility markets started sharply higher tracking positive global cues and a pullback in oil prices, then pared gains and briefly dipped into negative territory during mid-session as traders booked profits amid lingering geopolitical caution, before staging a decisive late recovery.  

Sources: 

• https://www.reuters.com/world/iran-war-live-trump-pauses-project-freedom-hormuz-strait-mentions-possible-peace-2026-05-06/ 
• https://www.reuters.com/business/energy/us-oil-prices-rebound-investors-assess-prospects-middle-east-peace-deal-2026-05-06/ 
• https://edition.cnn.com/2026/05/06/world/live-news/iran-war-trump-strait-of-hormuz