Oil surge on US-Iran strikes to drag Indian markets lower at open
Indian equities are poised for a sharply lower open as military strikes between the US and Iran drive crude oil prices higher, stoking inflation fears and triggering a broad regional sell-off in risk-sensitive assets.
Indian indices are poised to open sharply lower on Monday after fresh military strikes between the US and Iran triggered a surge in crude oil prices. Gift Nifty was trading around the 24,044 level, indicating a gap-down start for the Nifty 50 and Sensex with a discount of nearly 197 points from the previous close.
The escalation in Middle Eastern tensions has upended the relatively calm sentiment that characterized the end of last week. A rapid jump in energy costs has raised immediate concerns about persistent inflation and higher input costs for corporates. “The sharp rise in crude oil prices has heightened concerns over persistent inflationary pressures, rising input costs for businesses, and the possibility that major central banks may keep interest rates higher for longer. As a result, investors have adopted a risk-off approach, reducing exposure to equities across the region,” said Ponmudi R, CEO of Enrich Money.
This risk aversion has heavily impacted broader Asian markets. South Korea’s Kospi bore the brunt of the selling, crashing 4.61%, while the Kosdaq dropped 1.38%. Japan’s Nikkei 225 declined 1.10% and mainland China's CSI 300 fell 0.64%. Hong Kong’s Hang Seng Index bucked the regional trend, rising 0.91%. “Technology stocks, export-oriented companies, and other risk-sensitive sectors are leading the decline as investors shift towards safe-haven assets amid rising geopolitical uncertainty,” said Ponmudi R.
The shift in sentiment marks a stark reversal from Friday’s session in the US, where strong semiconductor shares pushed the Nasdaq up 0.29% to 26,281.61 and the S&P 500 gained 0.42% to close at 7,575.39. However, US equity futures have since turned lower, with S&P 500 futures falling 0.3% and Nasdaq-100 futures dropping 0.5%. “While US equity markets ended Friday on a positive note, sentiment has deteriorated significantly in Monday’s Asian session as rising energy prices and geopolitical uncertainty weigh on global risk appetite,” Ponmudi R added. European markets had ended Friday mixed, with mild profit-taking on Germany’s DAX offsetting modest gains in the FTSE 100 and CAC 40.
Traders are now watching key technical levels for the Nifty 50, with 24,000 acting as immediate support. A deeper drop could test the 23,800 to 23,700 zone, while resistance sits at 24,300 to 24,400. “Investors are expected to remain cautious throughout the session, closely tracking crude oil prices, geopolitical developments, FII activity and upcoming US inflation data for further market direction,” said Ponmudi R.
