Indian stock markets are expected to open lower today as rising US-Iran tensions push crude oil prices toward $75 per barrel. Investors remain cautious as higher energy costs threaten to impact inflation and corporate profit margins. Despite the short-term pressure, robust domestic institutional buying and record SIP contributions continue to provide a foundation of support for the markets.
Indian equity markets are heading for a challenging start to the trading session on July 13, 2026. The Gift Nifty index is indicating a sharp decline of approximately 200 points, reflecting the cautious mood across major Asian stock exchanges like Japan's Nikkei and South Korea's Kospi. The primary driver behind this negative sentiment is the sudden escalation of military activity between the United States and Iran, which has unsettled global financial markets.
Crude Oil Impact on Domestic Economy
The immediate investor focus is on the surge in crude oil prices, which have climbed into the $74 to $75 per barrel range. For India, a net importer of energy, a sustained increase in oil prices poses a dual risk. It can lead to higher domestic inflation and exert pressure on the current account deficit by increasing the national import bill. Investors are particularly concerned about how this shift will affect the profitability of oil marketing companies, which are expected to face margin pressure in the June quarter results currently being reported.
Earnings Outlook and Sector Performance
Beyond the immediate geopolitical noise, the broader corporate earnings landscape shows resilience. Brokerage data from Motilal Oswal Financial Services suggests a steady long-term outlook, with a projected compound annual growth rate of 15% for corporate profits from FY26 through FY28. While Q1FY27 profit growth for the overall coverage universe may see a slight decline of 3% year-on-year due to the drag from oil-related entities, the rest of the corporate sector is showing strength. Excluding oil and gas, companies are expected to show a healthy 14% year-on-year growth in profits. Sectors such as banking, non-banking financial companies, metals, and capital goods are expected to be the primary drivers of growth this quarter.
Institutional Support Remains Steady
The market structure is being supported by consistent buying from major institutional players. Foreign Portfolio Investors turned net buyers last week, contributing ₹4,670 crore to the market, while Domestic Institutional Investors added ₹8,280 crore. Furthermore, the retail investor base remains committed, with Systematic Investment Plan contributions hitting a three-month high of ₹317.8 billion in June 2026. These flows have historically provided a buffer against external volatility.
Investors may continue to monitor crude oil price stability and the ongoing Q1FY27 earnings releases. The ability of companies in the automobile, cement, and healthcare sectors to manage input cost pressure will be a key factor to watch, as these sectors are currently facing potential headwinds that could dampen their performance compared to the broader market.