Indian shares may fall as crude hits $108 on rising Mideast risks
- GIFT Nifty futures were at 23,346 points
Indian shares are poised for a sharp decline due to soaring Brent crude prices and escalating Middle East tensions, fueling inflation concerns and prompting foreign investor sell-offs.
- Escalating Middle East conflict and Red Sea shipping threats.
- Impact of rising crude oil prices on India's economy.
- Indian market performance and foreign investor activity.
Indian shares were set for a sharp fall at market open on Friday as Brent crude soared to $108 per barrel as a widening Middle East war forced investors to flee risk assets.
Iran-aligned Houthis seized control of Yemen’s port city of Mocha on Thursday and advanced down the Red Sea coast to strategic islands, military sources said, hours after President Donald Trump said he expected the Iran war to end after the U.S. midterm elections.
The move threatens shipping through the Red Sea, another major waterway, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks have intensified.
GIFT Nifty futures were at 23,346 points as of 7:18 a.m. IST, indicating a negative start for the Nifty 50 index, which closed at 23,477.8 on Thursday.
The Nifty and Sensex have fallen 1.8% and 2.1% this week, setting the stage for their fifth-straight weekly drop.
A busy IPO season, with large offerings from National Stock Exchange of India and potentially from billionaire Mukesh Ambani-backed Jio Platforms, has also weighed on markets.
The soaring oil prices inflamed inflation risks and sent global bond yields to new highs, while pressuring equities. MSCI’s broadest index for Asia Pacific stocks outside Japan was down 1.8%.
India is particularly vulnerable to higher oil prices as it imports the bulk of its energy requirements.
“The sharp increase in crude prices is likely to heighten concerns over India’s import bill, inflation and corporate margins, keeping risk appetite subdued,” said Ponmudi R, CEO of stock broker Enrich Money.
Foreign investors net sold Indian shares worth 4.38 billion rupees ($45.89 million) on Thursday, as per provisional data. They have offloaded $1.36 billion of shares so far in September.