Oil surge from Iran conflict drags Indian shares lower at open
Indian equities are headed for a weaker open as escalating US-Iran tensions push crude oil to six-week highs, threatening inflation and rupee stability in one of the world's largest oil-importing economies.
Indian benchmark indices are poised to decline on Thursday, with Gift Nifty indicating a negative start. The futures contract was trading at 23,884, a discount of nearly 104 points from the previous close.
The downside pressure stems primarily from a fresh surge in global crude prices triggered by an escalation in the US-Iran war. For India, a major oil importer, higher energy costs raise the spectre of renewed inflation and complicate the central bank's policy trajectory. “The combination of elevated oil prices and persistent pressure on the Indian rupee is likely to keep investors cautious, with market participants expected to closely monitor geopolitical developments and energy markets for further direction,” said Ponmudi R, CEO of Enrich Money.
This cautious posture contrasts sharply with broader Asian markets, which rallied on Thursday driven by semiconductor and technology shares. South Korea’s Kospi surged 3.04%, Japan’s Nikkei 225 gained 0.73%, and the Hang Seng index rose 0.76%.
However, regional sentiment cooled as the session progressed. “Sentiment, however, grew more cautious as the session progressed. Alphabet’s sharp increase in planned AI investment and Tesla’s earnings miss weighed on risk appetite, while elevated crude oil prices, which remain near six-week highs amid the Iran conflict, added another layer of uncertainty across the region,” said Ponmudi R. Wall Street closed lower overnight, with the Nasdaq Composite falling 0.57% to 25,690.90. The S&P 500 declined 0.14% to 7,498.96, and the Dow Jones Industrial Average slipped 0.01% to 52,218.58.
Market participants are now looking toward the European Central Bank’s policy decision and US weekly jobless claims for direction on global interest rates. “Attention now turns to the European Central Bank’s interest-rate decision later today. Markets broadly expect policymakers to leave rates unchanged, with investors focused on President Christine Lagarde’s guidance and any signals regarding a possible move in September,” said Ponmudi R.
Domestically, the Nifty 50 continues to struggle around the 24,000 psychological level. “The 23,800 – 23,850 zone is the immediate support to watch, with a break below this range potentially opening the way for a retest of recent lows. On the upside, the Nifty 50 index needs to reclaim and sustain above 24,000 for momentum to improve, with resistance seen near 24,150 – 24,200,” said Ponmudi R. “With the ECB decision, elevated crude oil prices, and market reactions to Alphabet and Tesla’s earnings all in focus, investors are likely to remain selective through the session,” he added.
