India's Nifty index climbed 2% on Tuesday, recouping losses as signs of a bottom emerge. Derivatives data reveals growing bullish wagers, with highest open interest in call options at the 24,000 and 25,000 strike prices. The India VIX has eased from recent peaks, suggesting panic subsides as confidence returns despite elevated volatility.

Economic activity slowed in March with manufacturing slump to a four-year low amid Iran war-related gas shortages. Foreign investors pulled $1.2 billion in March after two consecutive months of inflows. Morgan Stanley attributes this to a weak rupee and high hedging costs that limit appeal despite elevated bond yields.

Analysts remain divided on the Iran crisis duration and recovery path. Centrum reports tile and brass manufacturers hurting most from disruptions, while Emkay expects swift conflict resolution. Asset markets may recover faster than the broader economy, though oil prices continue to pose risks for India's near-term market stability.