Borsa Istanbul Outlook: War will test resilience

Turkish Equities Defy Geopolitics as Rally Extends to New Highs

Turkish and global equity markets have pushed to fresh highs despite ongoing geopolitical tensions in the Middle East. Analysts highlight strong risk appetite and broad-based gains, while warning that the rally may face short-term profit-taking and continued volatility.

Zeynel Balcı: Markets Remain Resilient Despite Risks

Equity markets in Türkiye and the United States have recently tested new highs, reflecting a sharp rebound in investor sentiment since late February.

According to market strategist Zeynel Balcı, the “nightmare” that had weighed on markets since February 28 has largely dissipated, leading to a notable increase in risk appetite. In Borsa Istanbul, gains initially led by banking and airline stocks have broadened across sectors.

The speed of the recovery has been striking. After roughly six weeks of pressure, markets rebounded quickly, with investors effectively treating the war environment as a buying opportunity. This rapid recovery has also provided a clearer sense of potential downside floors for equities.

Looking ahead, Balcı notes that if the reopening of the Strait of Hormuz is followed by a lasting ceasefire and eventual agreement between the United States and Iran, the positive market environment could persist. However, renewed conflict would likely reintroduce volatility.

Stock-Specific Rotation Gains Momentum

While optimism remains intact, Balcı expects markets to adopt a more cautious tone in the near term.

The reopening—and subsequent reclosure—of the Strait of Hormuz signals that negotiations are ongoing, supporting a “cautiously optimistic” outlook. After the recent rally, profit-taking in equities appears increasingly likely.

Investor behavior is also shifting:

• Capital is rotating from defensive assets into riskier instruments
• Sector leadership is changing

Stocks that outperformed during the conflict—such as defense and energy names—have recently given way to airline and banking shares. Turkish Airlines and Pegasus attracted renewed interest, while banking stocks rallied strongly on foreign inflows.

As gains become more widespread, stock-specific movements are expected to increase. However, upcoming first-quarter 2026 earnings are not expected to deliver strong upside surprises, given the lack of a meaningful rebound in the real economy.

Technical Outlook: New Highs Set the Stage

Borsa Istanbul’s benchmark index has broken above its previous peak of 14,532, reinforcing the bullish trend.

Key technical levels:

• Support: 14,532 (now a key support), followed by 14,100–14,000 and 13,750
• Resistance: 15,000 and 15,500, with 15,500 seen as a critical trend barrier

While profit-taking may occur, the broader upward momentum remains intact.

Tuncay Turşucu: Optimism Outpaces Fundamentals

Market analyst Tuncay Turşucu notes that the rally has occurred despite a macroeconomic backdrop that remains far from supportive.

Key challenges include:

• Higher interest rates
• Weak industrial production
• Soft PMI data
• Widening current account deficit
• A strong Turkish lira weighing on external balances

Despite these headwinds, the equity market has reached highly optimistic levels. Turşucu admits that he did not expect the index to break above its previous highs so quickly.

However, he cautions against betting against the market, invoking a well-known market principle: “Never fight the tape.”

Cautious Optimism Likely to Persist

Iran’s decision to reclose the Strait of Hormuz over the weekend—citing U.S. restrictions on its oil shipments—has introduced a more cautious tone at the start of the week.

Still, Turşucu believes:

• Profit-taking is likely after the recent rally
• However, any selloff is unlikely to be severe
• Markets continue to price in an eventual resolution to the conflict

Investors have consistently focused on a peace scenario since the beginning of the conflict, largely ignoring worst-case outcomes.

A Key Signal from the War: Strong Support Levels

One of the most important takeaways from recent developments is the resilience of Turkish equities during heightened geopolitical stress.

The BIST 100 index held above the $283 level (around 12,600 points) even at the peak of tensions, suggesting a strong technical floor.

This level is now seen as a critical support threshold, barring any major new economic or geopolitical shocks.

What Comes Next

Markets are expected to be driven by three main factors in the near term:

1. Developments in the Middle East conflict
2. The Central Bank of the Republic of Türkiye’s (CBRT) interest rate decision
3. Incoming corporate earnings

Bottom Line

Despite geopolitical uncertainty and weak macro fundamentals, Turkish equities continue to demonstrate strong upward momentum.

However, the rally is increasingly dependent on:

• Continued geopolitical stabilization
• Sustained investor confidence
• Absence of major negative surprises

Short-term volatility and profit-taking remain likely, but the broader trend remains cautiously positive.

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