Nifty Suffers as Brent Jumps Past $91; Geopolitical Risks Temper Domestic Equity Rally

Nifty Suffers as Brent Jumps Past $91; Geopolitical Risks Temper Domestic Equity Rally​

Indian benchmark indices face a subdued trading day, with signs pointing toward losses in both the Sensex and Nifty 50. This cautionary outlook is primarily driven by the surge in crude oil prices and lingering geopolitical concerns stemming from the US-Iran situation. GIFT Nifty was recorded down 85 points, or 0.35 percent at 7:45 am, signaling a muted opening for the Nifty 50 futures.

Monday witnessed a fifth consecutive session of declines for Indian equity markets. The Sensex closed at 77,728.16, marking a drop of 281.09 points, or 0.36 percent. Similarly, the Nifty finished at 24,287.65, declining by 78.35 points or 0.32 percent, as global headwinds continue to weigh on sentiment.

Global Cues Mixed as Crude Prices Surge Above $91​

Renewed concerns over geopolitical risks and spiking energy costs have created a mixed picture across international equity markets. The diminishing prospects for a diplomatic resolution in the US-Iran conflict are fueling inflation worries regarding energy supply stability, particularly concerning the Strait of Hormuz.

Brent crude oil advanced by 0.2 percent, crossing $91.01 a barrel. Meanwhile, US West Texas Intermediate climbed 0.5 percent to $84.92. This rise in crude has intensified inflationary risks globally and kept investor sentiment cautious across major exchanges.

Market Reactions: Asian Gains Mask Global Instability​

While the global picture remains fractured, some Asian markets managed modest gains. MSCI's regional equity gauge posted a 0.4 percent increase. South Korean shares jumped 2.7 percent as traders returned following Monday’s holiday.

Other major indices showed stability or slight dips. Japan's Topix was little changed, while Nikkei 225 futures declined 0.5 percent. Australian S&P/ASX 200 rose 0.2 percent. Meanwhile, US equities were down for the day, with the Dow Jones Industrial Average falling 0.51 percent and the Nasdaq Composite losing 0.31 percent.

Domestic Stability Tested Amid Foreign Outflows​

The domestic market's stability is being anchored by strong performance from domestic institutional investors (DIIs). DIIs extended their buying streak for a fifth consecutive session, investing equities worth Rs 5,100 crore. This sustained domestic interest managed to offset significant outflows from foreign institutions.

Foreign institutional investors (FIIs) continued as net sellers on Monday, offloading Indian equities amounting to Rs 2,535 crore. Despite this outflow pressure, the robust buying from DIIs provided a necessary cushion to the broader equity market.

Analyst View: Caution Prevails Amid Geopolitical Uncertainty​

Experts note that sustained domestic institutional investment continues to offer support and stability to the Indian stock markets, helping absorb intermittent foreign selling. However, investors are advised to maintain a cautious bias due to persistent geopolitical uncertainty and elevated crude oil prices.

Ponmudi R, CEO of Enrich Money, maintains that the Nifty's near-term technical stance should remain cautious to mildly bearish. The market is currently operating within a critical support zone between 24,200 and 24,300. A decisive breach below 24,200 could expose the index to the next major support level at 24,000.