Nifty Declines 200 Points, Suggests Weak Market Opening Amid Rising Oil Prices and US-Iran Tensions

Market Sentiment Remains Cautious Ahead of Tuesday's Trading

The Indian benchmark equity indices, Sensex and Nifty, are likely to open sharply lower on Tuesday, tracking losses on the GIFT Nifty, which fell more than 200 points in the morning trade. This would mark a fifth consecutive session of losses for the Indian market, as rising crude oil prices, persistent foreign fund outflows, and renewed US-Iran uncertainties continue to dampen investor sentiment.

The GIFT Nifty was trading at 23,254 at around 8 am, down 188 points or 0.8 percent from the previous close, indicating a weak opening for domestic equities. The signal comes after benchmark indices ended lower for a fourth consecutive session on Monday, with the Sensex falling 508 points and the Nifty shedding 165 points amid broad-based selling pressure.

Global cues were mixed, with Wall Street ending at fresh record highs overnight. The Nasdaq rose 0.42 percent to a record closing high of 27,086.81, while the S&P 500 gained 0.26 percent to 7,599.96. The Dow Jones Industrial Average added 46 points to close at 51,078.88. Technology shares led the gains, with Nvidia surging 6.3 percent after unveiling a new AI-focused chip, and Microsoft rising 2.3 percent after the companies' collaboration was described as an effort to "reinvent the PC" for the AI era.

Read also: SpaceX Seeks Record $75 Billion IPO, Potentially Positioning Elon Musk as the World's First Trillionaire

However, the positive lead from Wall Street failed to lift Asian markets. MSCI's Asia-Pacific index outside Japan fell about 0.5 percent, South Korea's Kospi dropped 2 percent, and Japan's Nikkei declined 0.7 percent as investors focused on renewed uncertainty surrounding the Middle East conflict and the outlook for global energy supplies.

Oil prices remained elevated after surging more than 4 percent in the previous session. Brent crude was trading around $95 a barrel, while U.S. crude hovered near $92. Reports that Tehran had suspended indirect negotiations with Washington raised doubts about a near-term breakthrough in US-Iran talks, and renewed concerns over the reopening of the Strait of Hormuz, a key route for global energy shipments.

The rebound in crude prices is a significant concern for India, which imports the bulk of its oil requirements. Higher energy prices raise risks to inflation, corporate margins, the current account deficit, and the rupee.

Institutional flows also remain unsupportive, with foreign institutional investors extending their selling streak to a fourth straight session on June 1, offloading more than Rs 3,900 crore worth of equities. Domestic institutional investors continued to provide support, buying over Rs 5,100 crore and extending their buying streak to ten consecutive sessions.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

According to Ponmudi R, CEO of Enrich Money, Indian markets are expected to remain cautious as geopolitical uncertainty, elevated crude prices, and persistent FII selling continue to weigh on sentiment. While domestic institutional buying is helping absorb part of the foreign outflows, markets remain highly sensitive to developments surrounding the U.S.-Iran standoff.

On the technical front, Ponmudi said the Nifty faces immediate resistance around 23,500, followed by the 23,600-23,750 zone, while support is placed at 23,300-23,250. A break below this range could open the door for a move towards the 23,000 mark. For Bank Nifty, immediate resistance lies at 54,000-54,200, while support is seen in the 53,300-53,000 zone.