Indian markets open lower as crude prices, geopolitical tensions weigh on sentiment

Domestic equity markets opened on a cautious note on Wednesday, with benchmark indices trading lower as rising crude oil prices and persistent geopolitical tensions weighed on investor sentiment.

The Sensex fell as much as 273 points, or 0.34 per cent, to 77,881 during early trade, while the Nifty declined 81 points, or 0.33 per cent, to 24,390.

The weakness was broad-based but some sectors managed to stay in positive territory. Nifty Metal emerged as the biggest sectoral gainer, rising 0.86 per cent, while Nifty PSU Bank advanced 0.60 per cent. Nifty Auto also gained 0.23 per cent.

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On the other hand, Nifty FMCG declined 0.64 per cent, followed by Nifty Realty, which fell 0.58 per cent. The Nifty Healthcare Index slipped 0.41 per cent, while Nifty IT was down 0.38 per cent.

Market experts said the benchmarks were largely moving sideways as investors remained cautious about the impact of higher oil prices and geopolitical uncertainty. The rise in Brent crude above the $89-a-barrel mark has emerged as a key factor limiting the possibility of a sustained market rally.

Experts also pointed to continuing tensions between the US and Iran, including a reported attack by the US military on a Panama-flagged container ship. Iran's tough position on reopening the Strait of Hormuz has added to concerns about the stability of global oil supplies.

Higher crude prices are particularly important for India because the country imports a large share of its oil requirements. A prolonged rise in crude can increase the import bill and put pressure on inflation, the rupee and corporate margins, making oil prices a key factor for domestic investors.

Despite the near-term risks, India's economic growth outlook is providing some support to the market. A recent SBI report has projected India's FY27 GDP growth at 8 per cent, significantly higher than the Reserve Bank of India's 6.7 per cent estimate.

If the higher growth projection materialises, stronger economic activity could translate into better corporate earnings during FY27, which experts see as a potential bullish factor for equities.

In the commodities market, Brent crude was trading around 1 per cent higher at $89.87 per barrel, while US West Texas Intermediate (WTI) crude gained 1.14 per cent to $84.14.

Asian markets remained mixed. Japan's Nikkei edged higher in early trade, while Hong Kong's Hang Seng declined around 1 per cent. South Korea's KOSPI, however, surged more than 4 per cent.

Overnight, US markets also closed lower. The Nasdaq fell 0.6 per cent, while the S&P 500 ended 0.32 per cent lower.

With crude prices climbing and geopolitical risks remaining elevated, investors are likely to closely track developments in global oil markets, the Strait of Hormuz and upcoming economic data for further direction.