Indian markets are likely to open mildly lower on Tuesday amid lingering US-Iran tension. Gift Nifty at 22,980 indicates a gap-down opening of about 50-70 points for Nifty. Analysts expect the market to remain volatile, with focus also on the RBI monetary policy outcome (on Wednesday) and upcoming results.
Muted start expected ahead of expiry
Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth, said: Indian markets are likely to open on a flat note, with Gift Nifty indicating a muted start ahead of the weekly expiry. “While global cues offer some support, the overall sentiment remains cautious, with markets continuing to track developments around the ongoing US–Iran conflict,” he said.
Geopolitical risks weigh on markets
According to Motilal Oswal Financial, Indian equity markets stand at a pivotal juncture, supported by several tailwinds yet overwhelmed by geopolitical headwinds emanating from the ongoing Iran-Israel/US conflict. “Prima facie, the Indian equity market should benefit from a favorable base year characterised by multiple fiscal and monetary accommodative measures, progress on foreign trade agreements, an improved environment for aggregate demand, a series of better-than-expected GDP prints, a rare underperformance relative to EM peers, and sustained faith from retail investors in Indian equities,” the report said. However, despite all these favourable factors, the near-term market set-up has been vitiated by the Iran-Israel/US war, and its consequent impact on the Indian economy and corporate earnings, given that a significant chunk of India’s energy requirements passes through the Strait of Hormuz (35-40% of crude demand and 54% of pre-war LPG needs), it cautioned.
Asian markets reflect cautious optimism
Asian markets such as Japan’s Nikkei and South Korea’s Kospi are also trading higher, reflecting this cautious optimism.
“However, mixed messaging from US leadership and the absence of a concrete ceasefire framework continue to keep uncertainty elevated. Iran’s rejection of the US proposal and its counter-conditions suggest that negotiations remain fluid, keeping geopolitical risk firmly in play,” Hariprasad said
Fragile balance between optimism and caution
From a market perspective, this creates a fragile balance between optimism and caution. Any clarity on de-escalation could support risk sentiment, while further escalation may quickly reverse gains, he added.
Expiry day adds to volatility
Domestically, today being expiry day adds another layer of complexity. India VIX remains elevated above 25, indicating sustained volatility in the system. At such levels, option premiums remain expensive, and the expected pace of theta decay is significantly slower. This alters the typical expiry dynamics, where time decay usually plays a larger role, and instead shifts the focus towards directional volatility.