Indian equity markets remained cautious on Monday morning, with both benchmark indices witnessing a sharp fall at the opening bell. The BSE Sensex began trading near 73,100, plunging over 1,400 points or nearly 2 per cent, while the NSE Nifty50 dropped more than 400 points or 1.83 per cent to open around 22,700.
Both indices had already shown weakness in the pre-open session amid rising geopolitical tensions 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 possible retaliatory strikes targeting energy assets across the Middle East, raising concerns over 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 key role in determining market direction in the coming days.
West Asia conflict, crude prices in focus
Geopolitical developments in West Asia continue to dominate market sentiment, with crude oil prices emerging as a crucial factor influencing risk appetite. Analysts warned that any escalation, particularly around vital energy routes such as the Strait of Hormuz, could keep oil prices above the $100 mark, posing risks to inflation and external balances for oil-importing countries 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 persistently high crude prices could heighten inflationary pressures and sustain a risk-off sentiment, while any easing of geopolitical tensions may trigger relief rallies.
Holiday-shortened week, data in focus
The trading week will be shorter, with markets remaining closed on Thursday on account of Ram Navami.
Investors will also keep an eye on key domestic macroeconomic data, particularly the HSBC Flash PMI readings for manufacturing, services and composite sectors, which are expected to offer 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 activity remains a major concern for domestic markets. So far this month, foreign investors have withdrawn ₹88,180 crore (around $9.6 billion) from Indian equities.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 flows, along with currency movements and global market trends, are expected to remain key triggers for near-term market direction.
Previous week’s performance
In the previous week, domestic markets ended on a muted note. The BSE Sensex slipped 30.96 points, or 0.04 per cent, while the NSE Nifty50 declined 36.6 points, or 0.15 per cent.
With geopolitical risks elevated and multiple global and domestic factors in play, market participants are expected to adopt a cautious approach at the start of the week.