The West Asia crisis has taken a toll on the domestic stock market, with key indices Nifty and Sensex falling about 7 per cent since the US-Israel started joint operations against Iran on February 28. While there has been a fragile ceasefire and Pakistan is reportedly playing the intermediary role between the two sides, Jefferies in its latest GREED & fear note said it is hard to conceive of a deal that Iran will agree to that the US President Donald Trump will be able to project as a 'win' on any credible basis.

Jefferies felt that the 47th US President, wants to end the war for domestic political purposes, given the mid-term elections are approaching. The recent US bond market action has revived expectations that Trump will do the long anticipated deal with Iran, Jefferies said but noted that any such deal will be contrary to the Israel's agenda of continuing to push for regime change in Iran. 

"So far as GREED & fear is concerned, a deal can be done with Tehran in five seconds if all US sanctions are removed and Iran’s assets are unfrozen," Jefferies said. 

It cited a New York Times article that suggested Israelis and the Trump administration were hopeful for a regime change, as they thought they had secured an “asset” close to the regime simila r to the Venezuela precedent. 

"Such hopes have now been dashed. GREED & fear has also passed through Istanbul this week, and no one there is expecting any imminent collapse of the Iranian regime," Jefferies said.

The ongoing supply issues at Strait of Hormuz have led to rising inflationary pressures and are reshaping global interest rate expectations. ICICI Securities said the domestic stock market is trading in a tight-range price behavior as it navigates geopolitical concerns, crude price volatility, shifting bond yields, and fluctuations in the USDINR pair.

"Ultimately, this prolonged sideways movement signifies a healthy consolidation process, effectively establishing a strong base for the next major leg upward. Going ahead, for a meaningful pullback to materialize, Nifty must decisively cross and sustain above its immediate resistance at the 20-day EMA and the upper band of the current consolidation zone at 23,800. Failing to do so will result in a prolonged consolidation within a narrow range of 23,200-23,800," it said.

A key support for Nifty is placed at 23,200, being 61.80 per cent retracement of previous move (22182-24601) and the price gap support from April 7.

"Notably, We expect broader market to relatively outperform the large caps as the ratio chart of Nifty500 vs Nifty 100 has resolved breakout of past two years consolidation. Such breakout would result into acceleration in Midcap and small caps outperformance going ahead," it said on Friday.