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Indian equity benchmarks traded over half a percent lower on Monday, defying the gains in Asian peers. The Nifty 50 index slipped below 23,800 level, while the Sensex cracked over 500 points. Investors remained cautious as fresh military escalation between the US and Iran kept concerns around energy supplies and the Strait of Hormuz in focus.
Broader markets traded mixed, as the Nifty Smallcap 100 index gained 0.2%, while the Nifty Midcap 100 index dropped over 0.4%.
Among sectors, Nifty IT, Nifty Metals, Nifty Media, Nifty PSU Banks, Nifty Realty, Nifty FMCG and Nifty Oil & Gas led the losses, while Nifty Pharma was the only index in the green.
Across Asia, South Korea’s KOSPI surged 3.18%, while Japan’s Nikkei 225 advanced 2.03%. Australia’s S&P/ASX 200 added 0.36%. Hong Kong’s Hang Seng Index and mainland China’s Shanghai Composite were largely flat.
The positive mood in Asian equities followed gains in US technology stocks on Friday, which helped improve broader risk sentiment.
However, rising crude oil prices continued to signal caution for markets, with the latest US-Iran confrontation raising fresh concerns over oil shipments and traffic through the strategically important Strait of Hormuz.
Brent crude rose as much as 0.8% to about $97 a barrel before giving up part of its gains, while West Texas Intermediate traded around $92 a barrel. European natural gas prices also climbed as much as 4.2% in thin trading.
US-Iran Tensions Remain In Focus
The latest escalation followed the US striking three Iranian oil tankers over the weekend, with Washington saying one of the vessels was destroyed. The US has accused Iran of launching ballistic missile attacks on American Navy warships.
Iran, meanwhile, said it plans to create a new restricted zone outside the Strait of Hormuz. Press TV reported that the proposed zone would start from the US Navy blockade line and stretch into parts of the Persian Gulf.
Tehran also claimed it had attacked three tankers in retaliation for the US strikes, although the claim has not been independently verified.
The developments have intensified concerns that the conflict could interfere with energy shipments through the Strait of Hormuz, a critical route for global oil flows.
Iran Nuclear Deal Uncertainty Adds To Risks
US Energy Secretary Chris Wright also warned that a nuclear agreement with Iran may not be imminent.
Speaking on ABC News’ This Week, Wright said there may not be an agreement at all, suggesting that a potential deal could instead be left for a future Iranian administration.
For Indian markets, the combination of a negative GIFT Nifty signal and elevated crude prices could keep sentiment cautious at the open, despite the strong performance across several Asian benchmarks.
With Washington and Tehran continuing to exchange strikes, investors are likely to track crude prices, developments around the Strait of Hormuz and any signs of further escalation closely through the trading session.
