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US Iran potential deal along with SpaceX's listing may significant lower FPI selling pressure and put major macro worries to rest

ICICIdirect Research 12 Jun 2026 DISCLAIMER

With the potential near-end of the Iran crisis and SpaceX's listing, significant external selling pressure may subside. Already, FII selling volumes have reduced in the last few sessions.
Also considering energy prices have hit their lowest levels in two months and the recent appreciation in Rupee may fuel a short covering move among heavyweights.
Sharp Friday’s rally driven by optimism surrounding geopolitical de-escalation erased early losses to settle the week on a positive note at 23600, up 1%.
Sectors: Financials lead the market recovery along with pharma, while IT, Metal underperformed

What we expect:

  • Foreign Institutional Investors (FIIs) have withdrawn more than ₹3 lakh crore from Indian equities so far in 2026, with March alone witnessing a record net outflow of ₹1.25 lakh crore. Since the onset of the Middle East crisis, FPI outflows have totalled approximately ₹2.8 lakh crore. Sectoral selling was concentrated in the Banking, IT, and Consumer Goods sectors. Despite this capital flight, the broader market (mid and small cap stocks) remains largely resilient, buoyed by Domestic Institutional Investors (DFIs/MFs), who have absorbed ₹2.7 lakh crore in the same period.
  • Global liquidity absorption triggered by the SpaceX IPO has further exacerbated these risks. As investors in emerging markets generated massive demand (e.g., the $250 billion figure in institution-funded proposal) against the $75 billion listing, liquidity was pulled offshore, causing significant pullbacks in global markets—including AI stocks in Korea, Taiwan, and Japan. Consequently, Indian equities have seen outflows of ~₹60,000 crore in just eight trading sessions since May 29th.
  • A decisive close above 23500 has confirmed the conclusion of corrective bias and opened the door for pullback option towards 24300 in coming weeks
  • Strong support remains at 23100


Key indices away from All Time High

Nifty – 13%

Bank Nifty – 10%

Midcap – 5%

Small Cap -10%

 

Constructive bias is based on following observation:

  1. Macro Driver: Confirmation of geopolitical de-escalation would result into further decline in Crude oil prices. This would be the key catalyst for Nifty for next leg of up move
  2. Bank Nifty has done the heavy lifting, as RBI amendments fueled the momentum, resulting into breakout from two month falling trend line
  3. Nifty midcap has taken a breather after clocking fresh high. Post earning revival is expected to trigger healthy catch up in Small cap index which is still 9% away from All Time high.

 

Sectors in Focus: Financials, Pharma, Auto

Stocks in Focus- Large Cap: Kotak Mahindra Bank, M&M, Bharti Airtel, Asian Paints, Nestle, Bank of Baroda, Divis Lab, Pidilite, Indigo

Midcap & Small cap: Federal Bank, Elgi Equipment, Bank of Maharashtra, Apollo Tyre, ICIL, Exide, Zentec 

 

Key Monitorable:

a)     FPI flow

b)     Crude Oil prices

c)      US Fed Policy

View our research recommendation on Bharti Airtel Ltd Also explore more on Research page

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