Nifty Sinks More Than 100 Points, Suggesting Weaker Start for Market as Crude Oil Price Exceeds $105

Indian Equity Markets Expected to Open Lower Amid Geopolitical Uncertainty

The Indian equity markets are likely to open lower on Tuesday, with the GIFT Nifty trading around 23,677 in early trade, down approximately 110 points or nearly 0.5 percent from the previous day's close. This weakness in GIFT Nifty futures comes as a result of elevated crude oil prices, persistent foreign selling, and renewed concerns over the fragile US-Iran ceasefire.

The benchmark domestic indices witnessed a sharp selloff on Monday, with the Sensex plummeting over 1,300 points and the Nifty slipping below the 23,850 mark amid broad-based weakness across sectors. Market sentiment was also hit after Prime Minister Narendra Modi urged fuel conservation and restraint on gold purchases to preserve foreign exchange reserves.

Global cues remained mixed on Tuesday morning. Wall Street benchmarks ended at record closing highs overnight, but Asian markets traded lower, and US index futures slipped as investors assessed the implications of rising oil prices and the ongoing conflict in the Middle East.

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On Wall Street, the S&P 500 rose 0.19 percent to close at a record high of 7,412.84, while the Nasdaq Composite gained 0.10 percent to finish at another record high of 26,274.13. The Dow Jones Industrial Average also rose 0.19 percent to 49,704.47.

However, sentiment in Asia remained under pressure as oil prices extended gains after US President Donald Trump cast fresh doubts over the Iran ceasefire. Trump described Tehran’s response to the US peace proposal as "stupid" and said the ceasefire was "on life support," fuelling concerns that the conflict and the closure of the Strait of Hormuz could drag on longer than expected.

Brent crude rose above $105 a barrel in the latest trade after settling nearly 3 percent higher overnight. US crude also climbed above $98 a barrel. Analysts said prolonged disruption in the Strait of Hormuz – a critical global energy transit route – continues to keep the geopolitical risk premium elevated in oil markets.

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

Higher crude prices remain a key concern for India, which imports the majority of its oil requirements. Elevated energy prices could worsen inflationary pressures, hurt the rupee, and weigh on corporate earnings and economic growth.

The rupee had already weakened to a record closing low of 95.31 per dollar on Monday amid rising crude prices and heavy foreign outflows. Foreign institutional investors remained aggressive sellers on Monday, offloading equities worth Rs 8,438 crore – the highest single-day selling since April 24. Domestic institutional investors, however, continued to provide support and bought shares worth Rs 5,940 crore.

Investors are likely to track India’s April retail inflation data due later on Tuesday. Economists polled by Reuters expect inflation to edge closer to the Reserve Bank of India’s 4 percent target from 3.4 percent in March.

Ponmudi R, CEO of Enrich Money, said Indian markets are expected to trade with a cautious and volatile undertone amid persistent geopolitical uncertainty. According to him, the ongoing US-Iran conflict continues to weigh on global sentiment and keep risk appetite subdued. Also, elevated crude prices and weakness in the rupee remain key concerns.

On the technical front, Ponmudi said Nifty is trading around the 23,800-23,900 zone, with a sustained breakdown below 23,800 potentially accelerating weakness toward 23,600-23,500. On the upside, the 24,000 mark remains the immediate resistance area.