Oil surge and US tech rout force Indian equities into a gap-down open
Escalating Middle East tensions and a Wall Street technology selloff have pushed crude oil past $92 a barrel, triggering a risk-off mood that threatens to drag Indian and broader Asian equities sharply lower at the open.
Indian equities are poised for a sharp gap-down opening on Friday as Gift Nifty futures traded near 23,681, well below the previous close of 23,869.60. The weak start follows a brutal overnight session on Wall Street and a massive spike in global energy costs driven by escalating Middle East conflict.
Brent crude has crossed the $100 threshold and WTI has jumped into the $92 to $93 range, marking a 6.8% surge over just two sessions. Ponmudi R, chief executive of Enrich Money, noted that the widening U.S.-Iran war and Houthi attacks on Saudi tankers in the Red Sea are directly fueling the energy rally. This spike has pushed U.S. Treasury yields to fresh highs, reinforcing inflation fears and a broader risk-off sentiment.
The energy shock compounded a severe technology-led selloff in the United States, where the Nasdaq Composite tumbled 2.15% and the S&P 500 fell 1.21%. Megacap stocks bore the brunt of the damage, with Tesla plunging 14% after missing earnings expectations and reporting negative free cash flow. Alphabet extended its post-earnings decline by up to 7% after raising its capital expenditure forecast to $205 billion, reigniting investor anxiety over the sustainability of artificial intelligence spending.
The negative momentum spilled over into Europe, where the STOXX 600 dropped 1.18% and the DAX fell 1.56%. STMicroelectronics slumped 16% on missed profit targets, while the European Central Bank held its key policy rate steady at 2.25%. Across Asia, futures pointed to severe losses, with Japan’s Nikkei 225 and South Korea’s Kospi expected to open down roughly 2.7% and 2.6% respectively.
Domestic investors are bracing for volatility, with technical indicators suggesting a fragile structure for the benchmark indices. Shrikant Chouhan of Kotak Securities warned that the Nifty 50 and Sensex will remain weak as long as they trade below 23,950 and 76,500, respectively. He projected potential downside to 23,650 and 75,700 unless sentiment reverses above those key thresholds.
The banking sector faces similar headwinds, with the Bank Nifty closing below its 200-day moving average. Vatsal Bhuva, a technical analyst at LKP Securities, highlighted that the index is holding just above the 38.2% Fibonacci retracement level of its recent rally. He identified 56,000 as crucial support, noting that a breach could trigger further declines from the immediate 56,200 floor.
