Indian benchmark indices are likely to open sharply lower on Wednesday after renewed geopolitical tensions between the US and Iran triggered a surge in crude oil prices, dampening global market sentiment and raising concerns over inflation and economic growth.
GIFT Nifty was trading around 150 points lower ahead of the opening bell, indicating a weak start for the Sensex and Nifty 50 after the benchmarks snapped a four-session winning streak in the previous session.
Oil Rally Sparks Risk-Off Sentiment
Investor sentiment turned cautious after fresh US military action against Iran intensified fears of supply disruptions in the Middle East, pushing Brent crude up around 2 per cent after gaining nearly 3 per cent in the previous session.
The latest escalation has reignited concerns over inflation, particularly for oil-importing economies such as India, where higher crude prices could widen the trade deficit, fuel inflationary pressures and squeeze corporate profit margins.
Global Markets Under Pressure
Asian equities mirrored overnight losses on Wall Street as investors shifted towards safer assets amid heightened geopolitical uncertainty. Rising US Treasury yields and a stronger dollar also added to the cautious mood across global financial markets.
Market participants are also assessing the broader implications of the Middle East conflict on global growth, with energy prices remaining the key variable driving risk appetite.
Focus Shifts To Q1 Earnings
Back home, investors will closely watch the start of the June quarter earnings season, with Tata Consultancy Services (TCS) scheduled to announce its financial results later this week.
Analysts expect corporate earnings guidance, particularly on demand trends and margins, to determine the near-term direction of domestic equities after the recent rally.
Foreign Flows Offer Some Support
Despite the weak global backdrop, foreign institutional investors (FIIs) remained net buyers in the previous trading session, providing some support to domestic equities. However, domestic institutional investors (DIIs) were net sellers, reflecting cautious positioning ahead of earnings and global developments.
Market experts believe volatility is likely to remain elevated in the near term as investors monitor geopolitical developments, crude oil prices and the unfolding earnings season. |
