Dalal Street is likely to open on a weak note on Thursday, tracking losses across Asian markets and rising global uncertainty after fresh comments from US President Donald Trump on the Iran war.
Early indicators suggest a soft start. GIFT Nifty futures were trading at 22,359 at 7:41 am, pointing to a gap-down opening for the Nifty 50, which had closed at 22,679.40 in the previous session.
Asian markets fell about 1.2% after in the Iran war were nearing completion. However, he did not clearly say when the conflict would end. This lack of clarity has kept investors cautious.
Trump also said that the over the next two to three weeks. This has raised concerns of further escalation in the near term and added pressure on global markets.
Rising geopolitical tension pushed crude oil prices higher in early trade. As of 8:10 am, Brent crude was at $105.91, up $4.75 or 4.70%, while WTI crude was at $103.88, up $3.76 or 3.76%.
Higher crude oil prices are negative for India as it increases import costs and may impact inflation. This could also weigh on market sentiment during the day.
Foreign institutional investors (FIIs) remained heavy sellers in the previous session. They sold equities worth Rs 8,331.15 crore in the cash market.
Selling was also seen across derivatives:
FII index options saw outflows of Rs 4,459.99 crore
FII index futures saw selling of Rs 78.49 crore
FII stock options saw outflows of Rs 90.87 crore
However, domestic institutional investors (DIIs) provided some support. DIIs bought equities worth Rs 7,171.80 crore in the cash market, while FII stock futures saw buying of Rs 3,199.31 crore.
In the last trading session, Indian markets had closed with strong gains. The Nifty 50 rose 348 points or 1.56% to end at 22,679.40, while the Sensex gained 1,186.77 points or 1.65% to close at 73,134.32.
The rally was in line with global optimism on hopes of easing tensions in the Iran conflict.
Garima Kapoor, Deputy Head of Research and Economist at Elara Capital, said Trump’s comments point to a possible end to the conflict, but near-term risks remain high.
“By saying core strategic objectives are nearing completion in the Iran War, Trump signals near term finality to the West Asian crisis. Next 2 to 3 weeks either the escalation could increase substantially including attack on Iranian power and crude facilities or some deal could be achieved.”
She added that the US focus has shifted away from regime change and the Strait of Hormuz, which could help ease energy supply concerns once tensions cool.
“We believe, as US Iran escalation ends, the cost of insuring vessels passing through Hormuz would come down too, allowing gradual movement of energy to resume in Hormuz.”
However, she cautioned that uncertainty will remain in the short term.
“Uncertainty will prevail in the near term with crude oil prices remaining firm, even as hopes have been offered for closure of war within next 2 to 3 weeks. So far Iran doesn’t seem to be buckling under any pressure of America, but America’s degrees of freedom are reducing, suggesting limited ability to continue longer. We see a finality to war soon. Heightened volatility is likely to persist in the short term.”
Markets are expected to remain volatile through the session, with global cues, crude oil movement and further updates on the Iran situation guiding sentiment.
While a sharp crash is unlikely at the opening, continued uncertainty and rising oil prices may keep markets under pressure in early trade.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)