Indian shares poised for lower open as Middle East tensions spike oil prices

Indian stock markets were bracing for a weak opening on Thursday morning as crude oil prices surged in response to reports of attacks on commercial vessels in two of the world's most critical shipping corridors. The Nifty 50 index futures were trading at 23,784.50 around 8 a.m. local time, signaling a decline from Wednesday's close of 23,866.85. The immediate trigger was a sharp spike in oil prices following claims by Iraqi security officials that Iranian boats laden with explosives had struck two fuel-oil tankers in the Strait of Hormuz and Iraqi territorial waters. The attacks came amid the broader U.S.-Israeli military campaign against Iran, and Iraqi officials reported that oil ports in the region had ceased operations entirely.

The price reaction was swift and substantial. Brent crude futures climbed $6.50 per barrel, a jump of 7.13 percent, to settle at $98.50 a barrel in early trading. West Texas Intermediate crude rose $6.10, or 7.1 percent, to $93.43. The moves reflected genuine concern about supply disruptions in a region that remains central to global energy flows. Even aggressive intervention from the International Energy Agency—which announced plans to release 400 million barrels from its strategic reserves, the largest drawdown in the organization's history—failed to stabilize sentiment. The United States separately pledged to contribute 172 million barrels from its own reserves beginning the following week. Neither announcement was enough to ease market anxiety.

For India's economy, the implications were immediate and troubling. Higher oil prices feed directly into inflation, a concern that had already begun to reshape expectations around monetary policy. Investors had been anticipating interest rate cuts from India's central bank, but sustained pressure on crude costs threatened to keep inflation elevated and delay any easing cycle. The broader Asian equity markets reflected this unease, with regional indices falling in tandem with overnight declines in U.S. and European exchanges. India's two primary indices, the Nifty and the Sensex, had already absorbed significant losses since the Middle East conflict intensified, each down roughly 5 percent from the start of the war.

The selling pressure on Indian equities was evident in foreign investor flows. International institutional investors offloaded Indian shares worth 59.65 billion rupees—approximately $646.7 million—on Wednesday alone, according to provisional data from the National Stock Exchange. Domestic investors provided some counterbalance, purchasing 46.14 billion rupees worth of shares, but the net effect was decidedly negative. The divergence between foreign and domestic buying patterns underscored the caution among global money managers as they reassessed exposure to emerging markets facing energy cost headwinds.

Among individual stocks drawing attention, Mahanagar Gas reported that curtailment of gas supplies had begun affecting its ability to serve industrial and commercial customers, a direct consequence of the supply disruptions. On a brighter note, KEC International announced it had secured new orders valued at 14.76 billion rupees for transmission and distribution projects, including what the company described as its largest composite order in Saudi Arabia. Wipro, the technology services firm, signed a multi-year contract with TruStage to modernize retirement services operations. These corporate developments offered modest counterweight to the broader market anxiety, but they were unlikely to offset the headwind from energy costs and the prospect of delayed rate cuts.