US-Iran war: How Indian stock market will be affected tomorrow?
What's the story
The Indian stock market witnessed a sharp decline on Friday, with both Sensex and Nifty closing more than 1% lower. The fall was mainly due to ongoing geopolitical tensions and rising crude oil prices. The Sensex plummeted by 961 points or 1.17% to settle at 81,287.19 while Nifty fell by 318 points or 1.25% to close at 25,178.65. So, what can we expect tomorrow? Let's find out.
Future outlook
Geopolitical tensions may impact global energy security
Manoranjan Sharma from Infomerics Ratings said the escalating tensions between the US, Israel, and Iran could have a major impact on global energy security and economic stability. He added that "Indian equity markets have already responded with risk-off sentiment." Sharma predicted benchmark indices are likely to open lower with heightened volatility as investors reassess geopolitical and commodity-related risks.
War impact
US military bases attacked in retaliation by Iran
The US and Israel launched a major military operation against Iran yesterday. Two Israeli officials confirmed the death of Supreme Leader Ayatollah Ali Khamenei. In retaliation, Iran fired missiles and drones at Israel, and targeted US military bases in Bahrain, Kuwait, and Qatar. The US military reported no American casualties while Israel claimed many incoming missiles were intercepted.
Oil impact
War could disrupt global crude oil supply
The US-Israeli strikes against Iran and Tehran's reprisals could severely disrupt global crude oil supply, sending prices soaring. Kunal Sodhani from Shinhan Bank India said about 50% of India's total crude oil imports (2.6 million barrels per day) pass through the Strait of Hormuz. Any disruption here directly threatens half of India's oil supply and raises risk premiums in global oil prices.
Precious metals
Precious metals expected to gain tomorrow
The newest developments in the Middle East are tipped to heighten geopolitical tensions and increase investor uncertainty. Anuj Gupta, a SEBI-registered market expert, said the rising war-related concerns are expected to drive uncertainty, prompting the investors to turn to gold and silver as safe-haven assets. He anticipates a gap-up opening for precious metals when markets reopen tomorrow.
Market trends
Foreign institutional investors turned net buyers in February
Ajit Mishra from Religare Broking said the performance of the global markets, particularly the US, amid lingering tensions between the US and Iran will be closely monitored. On Friday, US stock index futures fell as concerns over artificial intelligence weighed on technology shares. Meanwhile, after months of persistent selling, foreign institutional investors (FIIs) turned net buyers in Indian equities in February, with their strongest monthly inflows in 17 months.