India shares eye flat open as Middle East tensions spike oil
Indian equities are set for a muted start as escalating US-Iran military strikes push crude oil prices toward their largest weekly gain since April, triggering foreign investor outflows.
Indian equities are poised for a flat open on Friday as escalating military strikes between the United States and Iran drive a sharp rally in crude oil, threatening to reverse foreign capital inflows.
The Nifty 50 closed Thursday down 5.75 points at 24,072.75, while the Sensex added a marginal 1.44 points to end at 77,186.87. Gift Nifty indicators pointed to a similarly muted start, trading near the 24,095 level in early morning deals.
The primary headwind for Indian markets is a rapidly deteriorating geopolitical situation in the Middle East. The US has expanded its campaign to target Iranian bridges and transport infrastructure, prompting missile attacks from Tehran on US-allied nations in the region. Iran warned of further escalation.
The conflict has upended energy markets. Brent crude climbed 1.27% to $85.30 a barrel, and WTI gained 1.23% to $79.92. Both benchmarks are on track for weekly gains exceeding 11%, marking their strongest weekly performance since April. For India, a major oil importer, this surge raises the prospect of inflationary pressure and a weaker currency.
"Indian markets are expected to trade with a cautious bias as escalating geopolitical tensions in the Middle East, elevated crude oil prices, and sustained pressure on the Indian rupee continue to weigh on investor sentiment," said Ponmudi R, CEO of Enrich Money.
Global risk appetite is already weakening. Wall Street closed sharply lower overnight, dragged down by a semiconductor selloff, and broader Asian markets traded lower in early Friday sessions. Reflecting this caution, Foreign Portfolio Investors offloaded domestic equities worth ₹4,200 crore in the previous session.
From a technical standpoint, the Nifty 50 remains trapped in a tight range. "Nifty 50 remained range-bound, facing resistance in the 24,200 zone while holding above its immediate support of 24,050, where the 20-day EMA coincides with the rising trendline," said Ajit Mishra, Senior Vice President of Research at Religare Broking. He noted that a break below 24,050 could push the index down to 23,800, while a move above 24,300 could clear a path to 24,600.
Beyond equities, gold steadied at $3,980.17 per ounce after a 2% plunge in the prior session, though it remains headed for its largest weekly loss since early June on expectations of tighter US monetary policy. In contrast, US economic data showed resilience, with June retail sales rising 0.2% to match expectations, following an upwardly revised 1.0% increase in May.
