Nifty Posts Gains, Sets Positive Tone for Sensex and Nifty, Amid Cautious Sentiment Due to Crude Oil Price Hike and Middle East Tensions

Indian Markets Open with Modest Gains Amid Elevated Crude Oil Prices and Geopolitical Tensions

The Gift Nifty traded higher on Monday, indicating a mildly positive start for Indian markets, though elevated crude oil prices and renewed tensions in the Middle East are likely to keep sentiment cautious. At around 24,470, up about 50 points or 0.2 percent, the Gift Nifty suggests that the Sensex and Nifty may open with modest gains. However, the upside could remain capped amid rising geopolitical risks and a sharp rebound in oil prices.

Crude Oil Prices Surge Amid Strait of Hormuz Disruptions

Crude oil prices surged nearly 7 percent after the Strait of Hormuz was effectively shut again following fresh tensions between the US and Iran. Brent crude climbed to around $96.5 per barrel, reversing Friday's sharp decline and raising concerns over supply disruptions. The escalation has heightened uncertainty around global trade flows and inflation, a key risk for India as a major oil importer.

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

Global Markets React to Geopolitical Developments

Global cues were mixed. US markets had ended at record highs on Friday, supported by strong earnings expectations, but futures declined on Monday. S&P 500 futures fell around 0.5-0.7 percent as risk sentiment weakened. Asian markets traded on a mixed note: Japan's indices advanced while Australia slipped, as investors balanced optimism over earnings with caution after the weekend geopolitical developments.

Indian Markets End Higher Amid Easing Geopolitical Concerns

Back home, Indian markets had ended higher in the previous session (Friday), with the Sensex rising 0.65 percent and the Nifty closing above 24,300, supported by easing geopolitical concerns at the time. The rebound marked a recovery from the earlier volatility seen last week, although momentum remains sensitive to global developments.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Institutional Flows Remain a Key Monitorable

Foreign institutional investors (FIIs) extended their buying streak for the third consecutive session on Friday, purchasing equities worth Rs 683 crore, while domestic institutional investors (DIIs) continued to remain net sellers, offloading over Rs 4,700 crore. The divergence in institutional flows remains a key monitorable for near-term market direction.

Analysts Expect Elevated Volatility

Analysts expect volatility to remain elevated. Renewed tensions and the sharp spike in crude prices have introduced fresh uncertainty. Elevated risks could lead to FII outflows or reduced participation.

Technical Analysis Suggests Support and Resistance Levels

From a technical perspective, the Nifty is holding above its 50-day EMA, indicating improving short-term sentiment, but faces immediate resistance near the 24,400 zone. A sustained move above this level will be crucial for further upside, while support is seen around 24,000, with a stronger base near 23,800.

Q4 Earnings Season to Continue Stock-Specific Action

With the Q4 earnings season underway, stock-specific action is expected to continue.