Indian stocks drop as Middle East conflict pushes oil to six-week high
Indian equities are set to extend losses as escalating military strikes and shipping attacks in the Middle East drive crude prices to six-week highs, threatening to revive inflation in one of the world's largest oil-importing economies.
Gift Nifty indicators point to a weak open for Indian equities on Thursday following a broad-based selloff in the previous session. The Sensex plunged 715.06 points to close at 76,755.05, while the Nifty 50 dropped 191.45 points to settle at 23,996.25. Early Thursday, the Gift Nifty was trading at 23,883.5, representing a 105-point discount to the prior close.
The sharp downturn is driven by a rapid escalation in Middle Eastern geopolitical risks that has sent energy prices soaring. US military strikes targeted Iranian military and government infrastructure, prompting continued Iranian blockades and attacks on shipping vessels in the Strait of Hormuz. Compounding the threat, Yemen's Houthi rebels reportedly attacked two Saudi oil tankers, opening a new front in the regional conflict.
Brent crude futures surged 1.58% to $95.56 a barrel, and US West Texas Intermediate gained 1.30% to $87.96, pushing both benchmarks to their highest levels in over six weeks. For India, a major oil-importing economy, these supply disruption fears translate directly into inflationary pressures and currency headwinds. The combination of elevated oil and a pressured rupee is expected to keep domestic investors cautious.
The selling has inflicted clear technical damage on the leading indices. "The Nifty 50 has slipped below the immediate support level of 24,000, and the close suggests a possible retest of the 23,650–23,800 zone in the near term," said Ajit Mishra, Senior Vice President of Research at Religare Broking. Mishra noted that any rebound will face stiff resistance between 24,150 and 24,300.
The banking sector is showing similar fragility. Ponmudi R, CEO of Enrich Money, pointed to a decisive breakdown in Bank Nifty, identifying 57,000 as a crucial psychological support level. "Indian equities are poised for a weaker start, with investor sentiment remaining fragile as escalating tensions in the Middle East fuel a fresh surge in global oil prices," Ponmudi said.
Global markets reflected this broader risk aversion. Wall Street closed lower overnight, led by losses in the technology-heavy Nasdaq. The US dollar held steady at 101.11 against a basket of major currencies, while the Japanese yen languished near a four-decade low. Spot gold held firm at $4,133.82 an ounce as investors continued to seek safe-haven assets amid the uncertainty.
