Indian shares open lower on West Asia tensions and oil spike

Mumbai — Indian benchmark indices traded lower on Wednesday, tracking global markets, as oil prices surged to a near six-week high after the S. and Iran exchanged strikes overnight, intensifying the West Asia conflict and renewing concerns over inflation.

At 9:40 , the Sensex was down 618.22 points, or 0.8 percent, at 76,326.06, while the broader Nifty declined to 23,836.50, down 219.30 points, or 0.91 percent.

Analysts attributed the decline to a combination of factors, including the escalation in the US-Iran conflict, a consequent rise in Brent crude to $96 a barrel, and rising US bond yields.

"The escalation of the US-Iran conflict and the consequent 5 per cent spurt in Brent crude overnight to $96 a barrel is a sentiment negative," said V K Vijayakumar, Chief Investment Strategist at Geojit Investments. "However, this is not a big threat since our CAD is running at only 0.5 per cent and forex reserves are ample at $730 billion."

Vijayakumar said the bigger threat is the rising bond yields in the US. "The macro construct in the US indicated further hardening of the bond yields," he noted, adding that data showed yields in Japan and the UK also pushed toward multi-decade highs, while the 30-year Treasury yield hovered near a two-decade high. "If the 10-year US yield touches 5 per cent that has the potential to trigger a big correction in equity markets globally. Therefore, this is the macro indicator to watch closely," he said.

Devarsh Vakil, Head of Prime Research at HDFC Securities, said rising energy costs are stoking fears of sticky inflation, adding pressure to borrowing costs and weighing on richly valued equities — complicating the Federal Reserve's next policy move.

Global markets under pressure

Asian equities fell sharply as the global bond-market selloff and renewed US-Iran fighting weighed on risk appetite. MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.8 percent in early trade. South Korea's Kospi plunged 3 percent at the opening, while Japan's Nikkei 225 sank 2.2 percent.

US equity futures also pointed lower, with S&P 500 futures down 0.3 percent and Nasdaq futures falling 0.5 percent. US indices such as the Dow Jones, S&P 500, and Nasdaq Composite settled up to 1 percent lower overnight.

On the domestic front, foreign institutional investors (FIIs) sold Indian equities worth more than Rs 5,000 crore on Friday, adding another potential headwind as global risk sentiment deteriorates, according to reports.

Market breadth and sectoral movers

In Wednesday's session, the Sensex hit a low of 76,135.72, down 808 points or 1.05 percent, while the Nifty briefly declined below 23,800 to a low of 23,786.80. It was later trading at 23,827, still down 219.90 points or 0.91 percent.

Eternal Ltd, Infosys Ltd, HCL Technologies Ltd, and UltraTech Cement led the Sensex losers, falling up to 1.8 percent. A total of 28 of 30 index constituents fell. On the Nifty, 46 of 50 stocks declined, with Shriram Finance falling the most, down 2.62 percent.

Meanwhile, US President Donald Trump said on Truth Social he was not seeking to force Iran to the bargaining table, according to one report.