US-Iran War Escalation Rattles Global Markets - How Nifty 50 Could Open On Friday

Indian stock markets are likely to start the last trading session of the month on a decisively weak note when trade resumes on May 29, as fresh escalation in the US-Iran war has unsettled global investors.

US military strikes on a military site in Iran overnight have again raised fears that the conflict in the West Asia could spread further. In response, Iran’s Revolutionary Guards reportedly fired back, saying they targeted a US airbase. Around the same time, missiles and drones were also reported in parts of the Gulf region, adding to tensions across the area.

Following these developments, Gift Nifty futures slipped as much as 1.50 per cent to 23,550 level, indicating a deep gap-down start for India’s benchmark indices.

Indian stock markets remained closed on May 28 on account of the Bakri Id holiday.

Following the development, the international benchmark Brent crude surged more than 4 per cent to around $97 per barrel, while US oil benchmark West Texas Intermediate (WTI) climbed up to $92.50 a barrel. The jump in oil prices has once again raised concerns over inflation, global growth and pressure on oil-importing economies like India.

Global equities reflected that nervousness. Hong Kong’s Hang Seng fell over 1 per cent, Taiwan’s TAIEX fell more than 1.50 per cent,  European indices also fell as selling pressure spread across the region. In the US, futures were weak too.

Key Sectors Likely To Be Affected

The immediate pressure is likely to be visible in sectors sensitive to rising crude prices. Aviation, paints, tyre makers and oil-dependent industries could remain under stress if crude sustains near current levels. Banking and financial stocks may also see cautious positioning amid concerns that persistent global uncertainty could affect foreign flows.

IT stocks, however, may find some support from a stronger US dollar, although broader sentiment is expected to remain fragile.

Indian benchmark indices had already ended lower in the previous trading session before the holiday. The Sensex fell 142 points to close at 75,868, while the Nifty 50 slipped 7 points to settle at 23,907. Broader markets, however, managed to outperform, suggesting domestic investors were not in panic mode yet.

What Stock Market Cues To Watch Next

Traders will watch crude oil prices closely today after fresh tensions in the West Asian region, as any further rise can weigh on sentiment. Rupee’s movement against the US dollar will also be key cue to watch, as global uncertainty often strengthens the greenback. Markets will alos look at foreign institutional investor (FII) flows after the holiday for cues on near-term direction.