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Informist, Wednesday, Mar. 4, 2026

 

By Arya S. Biju

 

MUMBAI – Headline equity indices are expected to fall more in the coming sessions if the ongoing tensions in West Asia deteriorate further. The indices are expected to remain under pressure in the near term until the widening conflict in the region subsides, according to analysts. A surge in oil prices amid the ongoing tensions in West Asia and the closure of the Strait of Hormuz, coupled with a weakening rupee against the dollar and outflows of foreign institutional funds from Indian equities, are expected to weigh on the market sentiment in the near term. However, some analysts expect a bounce back in the benchmark indices in the upcoming session after their sharp decline over the past two trading sessions. 

 

Oil prices continued to rise on fears of a prolonged disruption at the Strait of Hormuz, a critical transit route that accounts for nearly 20% of global crude oil and gas flows. At 1540 IST, the May crude oil futures contract was at $83.92 per barrel, up over 3% from Tuesday's close and nearly 8% from Monday's close. The price of crude oil has risen by more than a dollar since this morning. "I don't think at current prices it (crude oil prices) has an inflationary risk," Rohit Srivastava, founder of Indiacharts, said, adding that if prices sustain above the $90-$100 levels will start affecting inflation. 

 

"The sharp increase in crude oil and related energy prices in the past few days will result in a weaker CAD (current account deficit) if high oil prices were to sustain for long," Kotak Securities said in a report dated Monday. Higher gold prices and imports amid risk-off sentiment may further weaken the country's current account deficit, while weak inflows of foreign institutional funds may hurt the balance of payments, the brokerage added. Compared to other emerging markets, India is more vulnerable to higher crude oil prices because it runs a high current account deficit, unlike most emerging markets, which have large current account surpluses. 

 

Foreign portfolio investors remained net sellers Monday, selling Indian equities worth INR 32.96 billion. At the same time, domestic institutional investors net bought equities worth nearly INR 85.94 billion. Going forward, foreign portfolio investor sentiment is expected to remain soft, while domestic retail sentiment may sour if hostilities in West Asia persist or worsen, Kotak Securities said. 

 

The Indian rupee fell to a fresh record low of INR 92.3025 per dollar Wednesday as importers and oil marketing companies bought the greenback after risk sentiment was hit due to the ongoing hostilities in West Asia, dealers at the foreign exchange market said. The rupee settled at 92.1500 a dollar on Wednesday, nearly 1% lower than its previous close of 91.4700. Going forward, the rupee is expected to trade in the INR 91.50 per dollar to INR 92.75 per dollar range, with volatility likely to remain high depending on crude price movement, global risk sentiment, and capital flows, Jateen Trivedi, vice president - commodity and currency research at LKP Securities, said in a note. 

 

Wednesday, the Nifty 50 index closed at 24480.50 points, down 385.20 points, or 1.6,% and the BSE Sensex closed at 79116.19 points, down 1122.66 points, or 1.4%. Technical analysts expect the Nifty 50 index to find support at 24350-24050 points and resistance at 24500-24800 points.

 

"We are of the view that the short-term outlook is weak, but oversold," Shrikant Chouhan, head of equity research at Kotak Securities, said in a note. "If the market sustains above this (24300 points) level, the immediate resistance would be at 24600 (points)," he said. Above 24600, the 50-stock index is expected to move towards 24800 points, Chouhan added. However, if the index falls below the 24300 points, he expects a further fall to 24100–24000 levels.  End

 

US$1 = INR 92.15

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Saji George Titus

 

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