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Oil Surges Past $100 as US-Iran Tensions Escalate
Indian equity markets are expected to open cautiously Friday, with GIFT Nifty futures trading lower. On Thursday, the benchmark Nifty 50 closed marginally down at 24,326.65, while the BSE Sensex slipped 114 points to 77,844.52. In a bright spot, the Nifty MidCap 100 reached a new milestone, closing above 62,000 for the first time.
Escalated tensions between the United States and Iran near the Strait of Hormuz appear to be the main driver behind the negative sentiment, leading to a sharp rise in crude oil prices. Brent crude futures for July delivery jumped 2.26% to $102.32 per barrel, and West Texas Intermediate futures rose 2.06% to $96.76. Brent crude reclaiming the $100 mark is a major concern for oil-importing countries like India.
Global Markets Dip as Local Factors Add to Pressure
Asian markets mirrored the global unease, trading lower as investors reacted to the US-Iran exchange. Major indices in Australia, Hong Kong, South Korea, Japan, and Shanghai all posted declines between 0.17% and 1.55%. Experts highlighted that Indian equity markets are particularly sensitive to such geopolitical developments.
Ponmudi R, CEO of Enrich Money, commented, "Any meaningful progress in diplomatic negotiations or a further easing in oil prices could trigger a relief rally, while any escalation in geopolitical tensions may amplify downside risks and reinforce the prevailing risk-off sentiment." Siddhartha Khemka of Motilal Oswal Financial Services added that foreign institutional investor (FII) outflows and ongoing rupee weakness are also adding to the pressure, expected to weigh on market sentiment.