Indian shares to open muted as Mideast conflict keeps oil above $100

Indian shares are likely to be subdued in early trade on Thursday, as an intensifying Middle East conflict kept crude prices above ​the $100 per barrel mark, while investors awaited key U.S. data before ‌the Federal Reserve’s policy next week.

GIFT Nifty futures were at 23,489.50 points as of 7:44 a.m. IST, indicating a muted start for the Nifty 50 index, which closed ​at 23,431.5 on Wednesday.

The Nifty and Sensex settled at three-month ​lows in the previous session as Brent surpassed $100.

They have fallen ⁠in seven out of the last eight sessions, giving up about ​3.1% each.

Iran said it attacked 10 ships near the Strait of Hormuz after ​the US sank five Iranian oil tankers in the largest attacks on shipping in the six-month-old conflict.

Higher oil prices are detrimental for India, the world’s third-largest importer of ​the commodity, as they increase the import bill, worsen inflationary pressures and ​weigh on economic growth and corporate profitability.

“Costlier crude will squeeze margins in oil-sensitive sectors ‌such ⁠as aviation, paints, tyres, chemicals, logistics and parts of FMCG,” said Rajeev Sharan, head of research at Brickwork Ratings.

“Dearer oil also adds to inflation risk and strengthens the case for the U.S. Fed to sound hawkish, or ​even hike interest ​rates on September ⁠16.”

Foreign portfolio outflows from Indian markets stood at 5.83 billion rupees ($61.3 million) on Wednesday, while domestic institutional investors bought ​shares worth 15.09 billion rupees, according to provisional data ​from the ⁠NSE.