India markets flat as Middle East strikes pressure rupee
Indian equities stagnated as US-Iran military strikes near the Strait of Hormuz drove crude prices higher, pushing the rupee toward record lows and delaying fresh investment ahead of earnings.
Indian benchmark indices marked a second consecutive session of narrow trading on Thursday, with the Nifty 50 and Sensex closing essentially flat while broader markets posted modest declines.
The stalemate followed a sharp escalation in Middle East hostilities after US forces struck Iranian missile facilities near the Strait of Hormuz and fired on a vessel attempting to breach a naval blockade. Iran responded with missile and drone attacks on US regional allies, warning of a harsher military retaliation. The exchange effectively ended an interim truce and heightened fears of a wider regional war capable of disrupting global energy supply chains.
For India, a major energy importer, the friction translated directly into currency pressure as the rupee hovered around 96.2 per US dollar after slipping to an eight-week low. Having depreciated roughly 1.7% this month, the currency is approaching its all-time low from May, a trajectory driven by elevated crude prices that exacerbate the trade deficit and limit the central bank's scope for monetary easing.
Traders stepped back from broad-based buying, opting to wait for June-quarter earnings for direction and leaving sectoral performance mixed. Consumer durables led gainers with a 1.60% advance, supported by chemicals, media, IT, and auto stocks, which added between 0.46% and 1.40%. Real estate stocks fell nearly 1%, while PSU banks and metals declined 0.46% and 0.37% respectively, reflecting varying sensitivity to interest rate and commodity price swings.
The market's muted reaction masks underlying vulnerability, as sustained Hormuz tensions are likely to keep crude elevated and the rupee under pressure. Investors are expected to remain highly selective until the geopolitical picture clarifies. This means prioritizing sectors with strong domestic earnings momentum over those exposed to global macro shocks.
