Stock markets likely to see weak start amid Iran

Indian equity markets are likely to see weak start on Monday as the global risk sentiment is expected to be impacted by heightened geopolitical tensions in the Middle East due to the Israel-Iran conflict. On Friday, the Sensex declined 961.42 points, or 1.17 percent, to settle at 81,287.19, while the Nifty plummeted 317.90 points, or 1.25 percent, to end up at 25,178.65. Indian equities have been unpredictable in recent weeks, often giving up early gains, as key indicators continue to struggle to break the previous peak levels, signalling a significant resistance at higher zones. Market traders have been on the edge for quite some time due to concerns around US President Donald Trump's tariff threats, fears over AI-related estimations, and ongoing global unrest. Now, Iran, US and Israel conflict have sparked a global uncertainty, worries around price of crude oil and stock market outlook around the world. With these developments, experts feel that Indian equity indices are going to face a selling pressure. Meanwhile, the most crucial hotspot in any prospective war with Iran, according to experts, is the Strait of Hormuz. Almost 20 per cent of the world's oil supply passes via this narrow waterway, therefore, any potential risk to this belt, would result in a major impact in markets, including oil prices. According to projections, oil prices could spike up to $100 per barrel if the Strait of Hormuz is closed. The implications are especially high for India, as multiple reports suggest that 60 percent of country's LNG imports and about 50 percent of her oil imports make its way via the Strait. So, any instability in this route would have immediate and significant macro-economic effects. Additionally, the spike in oil prices imply a significant macro risk, as India imports more than 75 per cent of its petroleum needs. These risks include escalating inflationary concerns, expanding the current account imbalance, and impacting the RBI's rate curve.