Indian Shares Set for Muted Opening as Oil Prices Rise on Middle East Tensions

Indian shares are expected to open largely flat on Tuesday after falling to a six-week low in the previous session. Investors remain cautious as higher crude oil prices and growing risks around the Middle East conflict continue to weigh on market sentiment.

GIFT Nifty futures were trading at 23,800 points at 7:40 a.m. IST, indicating a subdued start for the Nifty 50. The index closed Monday’s trading session at 23,779.15.

Oil prices remained a major issue for Indian markets. Brent crude futures were trading around $97 per barrel, increasing concerns for India, which imports over 85% of its crude oil needs.

Indian Shares Face Pressure From Rising Oil Prices

Tensions in the Middle East have risen as Iran warned that any new attacks on Tehran could result in reprisal on US assets. Iran also stated that energy facilities throughout the Gulf, particularly US-linked oil and gas interests, could be at risk.

Recent developments have driven oil prices higher, raising fears about inflation and economic growth. An protracted rise in crude prices may put more pressure on gasoline expenses and the overall economy, according to Indian investors.

The Nifty 50 and the Sensex both closed Monday at their lowest levels in six weeks. Information technology equities were among the biggest losers, while worries about the Middle East and the possibility of a US interest rate hike dampened overall risk appetite.

U.S. Inflation Data in Focus

Investors are also waiting for the next significant release of US economic data. According to Hariselvan Radhakrishnan, founder and CEO of research analysis business HST Wealth, the market will likely focus on the United States’ inflation report, which is coming Friday evening.

The report may influence expectations for the Federal Reserve’s policy decision on September 16. Stronger-than-expected inflation may raise expectations of higher US interest rates.

Higher US interest rates may make American assets more appealing as compared to emerging markets. This might potentially restrict foreign investment in places like India, while strengthening the dollar and US Treasury yields.

Despite the recent weakness, foreign investors returned to buying Indian equities on Monday. Provisional data showed net purchases of Indian shares worth 2.8 billion rupees ($29.6 million), ending a three-session selling streak.