Indian equity markets remained cautious on Monday morning, with both benchmarks crashing as markets opened. The BSE Sensex opened trading near 73,100, plummeting more than 1,400 points or close to 2 per cent, while the NSE Nifty50 nosedived over 400 points or 1.83 per cent to start the session near 22,700.
The Sensex and Nifty50 declined sharply in the pre-open session as geopolitical tensions intensified following fresh developments over the weekend involving the US and Iran.
US President Donald Trump warned that Washington would “obliterate” Iran’s power infrastructure if Tehran failed to reopen the Strait of Hormuz within 48 hours. In response, Iran signalled potential retaliatory strikes targeting energy assets across the Middle East, raising fears of further escalation and disruption to global oil supplies.
Analysts said global cues, foreign investor activity and movements in the rupee against the US dollar will play a crucial role in shaping market direction in the days ahead.
West Asia Conflict, Crude Prices In Focus
Geopolitical developments in West Asia continue to dominate market sentiment, with crude oil prices emerging as a key variable influencing risk appetite.
Analysts warned that any escalation in tensions, particularly around critical energy supply routes such as the Strait of Hormuz, could keep oil prices elevated above the $100 mark, posing risks to inflation and external balances for oil-importing economies like India.
“Markets are likely to remain highly volatile and event-driven, with near-term direction largely contingent on developments in the Middle East,” said Ponmudi R, CEO of Enrich Money.
He added that sustained high crude prices could intensify inflationary pressures and maintain a risk-off sentiment, while any easing in geopolitical tensions may trigger relief rallies.
Holiday-Shortened Week, Data In Focus
The trading week will be shorter, with stock markets remaining closed on Thursday on account of Shri Ram Navami.
Investors will also track key domestic macroeconomic data, particularly the HSBC Flash PMI numbers for manufacturing, services and composite sectors, which are expected to provide early signals on business activity trends.
“This week is expected to remain data-sensitive amid ongoing global uncertainties,” said Ajit Mishra, SVP – Research at Religare Broking Ltd.
FII Outflows Continue To Weigh
Foreign investor flows remain a key concern for domestic markets. So far this month, foreign investors have pulled out Rs 88,180 crore (around $9.6 billion) from Indian equities.
Analysts attribute the sustained outflows to rising geopolitical tensions, a weakening rupee and concerns over the impact of elevated crude oil prices on India’s growth outlook and corporate earnings.
FII activity, along with currency movements and global market trends, is expected to remain a critical trigger for near-term market direction.
Previous Week’s Performance
In the previous week, domestic markets ended on a subdued note. The BSE Sensex slipped 30.96 points, or 0.04 per cent, while the NSE Nifty declined 36.6 points, or 0.15 per cent.
With geopolitical risks elevated and multiple global and domestic triggers in play, market participants are expected to adopt a cautious approach at the start of the week.
