Rising tensions between Israel and Iran are set to test investors’ nerves at the start of the week, with Indian stocks likely to open sharply lower amid a risk-off mood in global markets.The tension comes after the preemptive strikes launched by Israel on Iran after the failure of the nuclear agreement talks with the United States to achieve a breakthrough. President Donald Trump described the operation as a “major combat operation in Iran” in a video posted on social media after launching strikes near the offices of Supreme Leader Ayatollah Ali Khamenei.Global indicators remain weak and are expected to weigh on domestic stocks despite India’s third-quarter GDP growth of 7.8%, reflecting broad-based strength in the economy.
Kranthi Pathini, director of equity strategy at WealthMills Securities, said markets were bracing for such an escalation. “The inevitable finally happened after weeks of uncertainty. The street was expecting the conflict to turn into war sooner or later,” he said, quoted by ET.Pattini expects volatile trade with the possibility of sharp cuts in the near term. He said that crude oil prices will be the main driver of the Indian markets, warning that levels around $80 per barrel may turn strongly negative.
His advice to investors is to stay invested and use corrections to buy on dips over the long term.Buthini added, “The Iranian response will determine the course of the conflict.”Market expert Anuj Gupta also expects a weak opening and advised investors to trim existing positions and wait for clarity before starting fresh trades.
Indices finished weak on Friday
Indian indices had already closed lower on Friday amid widespread selling pressure.
The Nifty index fell 317.90 points, or 1.25%, to close at 25,178.65 points, while the 30-share Sensex fell 961.42 points, or 1.17%, to close at 81,287.19 points. Automotive, financial and FMCG stocks were major laggards, while IT companies witnessed selective buying.
Geopolitical risks are intensifying
According to an Associated Press news report, Iran currently maintains a self-imposed limit of 2,000 kilometers on its ballistic missile program, leaving most of the Middle East and parts of Eastern Europe within reach.
Iran said it was no longer enriching uranium, but it prevented international inspectors from visiting sites targeted by previous US strikes.The Associated Press reported that satellite images showed new activity at two such sites, suggesting that Iran may be evaluating or recovering the materials.Before the strikes, the United States had built up a significant military presence in the Middle East, including the aircraft carrier USS Abraham Lincoln and guided-missile destroyers.Explosions were reported in northern Israel when air defense systems intercepted incoming Iranian missiles, with nationwide warnings issued. There was no immediate confirmation of the casualties.
Global markets are signaling caution
Wall Street ended lower on Friday. The Dow Jones index fell 521.28 points, or 1%, to 48,977.90 points. The Nasdaq Composite Index fell about 210 points, or 1%, to 22,668.20. The S&P 500 index fell 0.43%.European markets were mixed, while Asian signals remained cautious.
Technical levels in focus
Volatility is likely to remain high amid uncertain global signals, Bajaj Brokerage said, adding that the 25,400-25,500 region could act as immediate resistance.The index broke its critical support of 25,300 and the 200-day moving average, indicating a bearish shift in momentum in the short-term, Dr Ravi Singh, chief research officer at Master Capital Services, told ET.“For next week, the psychological level of 25,000 is a make or break level, and a breakdown here could push prices towards the 24,800 region,” Singh said. “The strategy continues to sell on rallies until the index decisively reclaims the 25,600 level. Expect continued volatility as the market searches for a stable bottom.”(Disclaimer: Recommendations and opinions regarding stock marketOr other asset classes or personal finance management tips provided by experts of their own. These views do not represent the views of The Times Of India)