Nifty Falls Over 260 Points, Suggests Weak Market Open Amid Global Selloff and Middle East Tensions

Global Market Turmoil Sends Indian Indices into a Tumble

Indian benchmark indices are expected to open sharply lower on Monday, mirroring a steep selloff in global equities. The downturn is attributed to renewed geopolitical tensions in the Middle East, higher crude oil prices, and a sharp correction in technology stocks, which have dampened investor sentiment worldwide.

In early trade, the GIFT Nifty was trading at 23,184.5, down 262.5 points or 1.1 percent, indicating a gap-down start for the Nifty 50. This comes after benchmark indices ended marginally lower on Friday following the Reserve Bank of India's policy decision. The Sensex fell 117 points, while the Nifty declined 50 points after the RBI retained the repo rate at 5.25 percent and maintained its neutral stance.

Global cues turned decisively negative over the weekend, with Asian markets experiencing a sharp decline on Monday. The South Korean KOSPI plummeted more than 6.8 percent, while Japan's Nikkei dropped 3.4 percent. The broader MSCI Asia-Pacific index outside Japan also traded firmly lower.

Read also: SMR Jewels Debut on BSE SME with 20% Listing Discount

Wall Street suffered its sharpest decline in months on Friday as stronger-than-expected U.S. jobs data fueled fears that the Federal Reserve could keep interest rates higher for longer or even resume tightening. The Dow Jones Industrial Average fell 695 points, the S&P 500 dropped 2.6 percent, and the Nasdaq slumped more than 4 percent, ending Wall Street's nine-week winning streak.

Crude oil prices also moved higher after renewed hostilities between Israel and Hezbollah raised concerns over the prospects of a broader Middle East peace deal. Brent crude rose about 2.5 percent to above $95 per barrel, while WTI crude climbed more than 2 percent to around $92.6 per barrel.

According to Ponmudi R, CEO of Enrich Money, Indian markets are likely to remain cautious as renewed tensions between Iran and Israel have weakened hopes of a lasting ceasefire and revived concerns over global energy supplies. He noted that crude oil prices have climbed back into the $92-93 per barrel range, posing fresh risks to India's inflation outlook and import bill. Weak global markets and continued foreign institutional selling are also expected to keep volatility elevated.

Foreign institutional investors remained net sellers on June 5, offloading shares worth Rs 4,447 crore, while domestic institutional investors purchased equities worth Rs 4,360 crore, extending their support to the market.

Read also: Indian Markets Plunge: Sensex Falls 650 Points as Nifty Drops Below 23,200 Amid Crude Price Concerns

Technical Indicators