June, 2026

Dust settles... for now

Mohit Dugar, CFA || ARN - 314375

After almost three months of hostilities, the markets have taken a sigh of relief as the war has appeared to be halted… for now. As it is Trump’s nature, signing of the MoU was not without added drama, but it has been signed and various pointers agreed upon including immediate and permanent termination of military operations on all fronts, including in Lebanon, re-opening of the strait of Hormuz, US$300 billion reconstruction and economic development fund for Iran, approval by Iran for inspection of its nuclear facilities by IAEA, termination of all sanctions on Iran by the USA and most importantly, Iran agreeing not to pursue the procurement of Nuclear Weapons. Markets reacted very positively to this development with crude almost returning back to pre-war levels at about $72/bbl.

In international news, U.S. consumer inflation accelerated to 4.2% in May, the highest level in three years, driven by higher gasoline and energy prices amid the Middle East conflict; FED in its FOMC meet has kept the rates steady, but has increased the inflation outlook for the year end. The latest dot plot signalled a more hawkish outlook, with nine of the 18 policymakers expecting at least one rate hike by the end of 2026 and six projecting two 25-basis-point increase; A US court has deemed Trump’s $100K H-1B visa fee as illegal.

Elon Musk has become the world’s first trillionaire after SpaceX’s IPO has reportedly attracted demand for more than four times the shares on offer. The company planned to raise about $75 billion by offering 555.6 million shares at $135 each, implying a valuation of roughly $1.8 trillion, making it one of the largest public offerings in history, after listing shares debut at $150 (11% premium from $135) officially making Musk world’s first trillionaire.

The European Central Bank raised its rate to 2.25% from 2.0%, marking its first interest rate hike in nearly three years; Bank of Japan raised its policy rate by 25 basis points to 1%, the highest level in over 30 years and the first-time rates have reached 1% since 1995. The move reflects the central bank’s continued policy normalization amid a weak yen and rising inflationary pressures, partly driven by higher energy costs linked to the Iran conflict; UK PM Keir Starmer resigns – sixth PM to resign after Brexit; Taiwanese and South Korean markets have overtaken Indian markets on the basis of market capitalisation.

On India front, in order to attract foreign capital, Indian Government has eliminated all takes for FPIs on Government bonds, leading to India G-Sec yields tumbling – this has led to an approximate inflow of US$40-50 billion, the RBI has also introduced measures to attract foreign capital by absorbing the foreign exchange risk on FCNR(B) deposits, allowing banks to offer more attractive returns to NRIs – eyeing another US$20 billion inflows; Equity MF inflows down MoM by 40% – inflows hit 12-month low of ₹22,908 crore in May, compared with ₹38,440 crore in April; The RBI has infused ₹72,300 crore of short-term liquidity into the banking system through two Variable Rate Repo (VRR) auctions after surplus liquidity tightened due to advance tax outflows. The move is aimed at ensuring adequate liquidity and smooth functioning of money markets; E85 petrol with 85% ethanol blending introduced at select pumps across the country, cheaper by ₹20/litre.

On the macro front, RBI in its MPC meet kept the policy rates unchanged at 5.25%; GDP growth came at about 7.7% for the year ending FY26, however, RBI Lowered growth forecast to 6.6% from 6.9% for year ending FY27 and has increased inflation outlook to 5.1% from 4.6%; Retail inflation inches up to a 5-month high of about 3.93% in May; India posted a current account surplus of $4.7 billion in April 2026, reflecting stronger external balances. However, higher foreign portfolio investor (FPI) outflows of $8.7 billion led to an overall balance of payments deficit; India’s core sector growth slowed to a seven-month low of 0.5% in May; India’s industrial output grew 5.1% year-on-year in May; India’s gross GST collections rose 13.9% YoY to ₹1.95 lakh crore in June 2026, while net collections after refunds grew 11.2% to ₹1.62 lakh crore. The growth was led by a 34.6% surge in IGST on imports, even as domestic gross revenues grew at a slower 6.5%.

Signs of recovery are visible with certain pockets of wealth creation visible which can help in taking decent positions. Next 3 months are crucial for world markets with a lot of events lined up. Stay patient and believe in India’s potential to now emerge on top. Happy Investing!

www.pinnaclefinvest.com

mohit@pinnaclefinvest.com

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