Futures indices Sensex and Nifty 50 opened with a decline on Friday. This occurred against the backdrop of a sharp rise in oil prices above the $100 per barrel mark, linked to the escalation of conflict in West Asia, which triggered concern in bond markets and revived fears of a new inflationary shock.
The BSE Sensex index fell by 873 points or 1.1 percent, reaching a low of 75,488.91. Meanwhile, Nifty 50 lost 261 points or 1.1 percent, dropping to 23,608 during morning trading. Analysts note that overall uncertainty and high volatility in the markets persist without signs of imminent improvement.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed out that the main reason for the recent sharp surge in oil prices was the attack by Houthi rebels, supported by Iran, on Saudi tankers in the Red Sea. Furthermore, the weakening of the national currency led foreign portfolio investors (FPIs), who had previously been buying assets, to switch back to selling.
By 9:40 AM, Sensex was at 75,645, showing a decline of 750 points or 0.98 percent, while the NSE Nifty index traded at 25,650, down by 219 points or 0.92 percent. Only Nifty IT and Nifty FMCG showed slight positive momentum in the sector, whereas Nifty Auto, Nifty Metal, and Nifty Realty fell by more than 1 percent each. In broader segments, such as Nifty Midcap 100 and Nifty Smallcap 100, a drop of nearly 1 percent was observed.
One of the key factors is the rise in oil prices, which once again exceeded the $100 mark due to escalating tensions in West Asia. The Houthis attacked Saudi tankers in the Red Sea, creating a new front alongside ongoing disruptions in the Strait of Hormuz. Brent crude oil price surpassed $100 per barrel for the first time since late May. At the last check, Brent was trading at $100.85 per barrel, up 0.12 percent after a night jump of 7 percent. WTI was valued at $91 per barrel.
Devarsh Vakil, Head of Primary Research at HDFC Securities, stated that 'ongoing military actions by the US against Iran and collapsing hopes for a ceasefire are reigniting concerns about persistent inflation.' The situation is exacerbated by Trump's tariffs: the Trump administration imposed a 10 percent tariff on goods imported from India and 16 other countries as part of the fight against forced labor.
Devarsh also noted that rising energy costs and a stronger-than-expected labor market are intensifying fears that the Federal Reserve will delay policy easing. He added that 'the jump in the US 10-year yield to 4.7 percent is negative for global stock markets. This is a short-term risk.' The yield on 10-year treasury bonds jumped to its highest level in over a year, trading in the range of 4.67 to 4.71 percent.
The Rupee fell by 6 points, opening at 96.63 against the US dollar on Friday, as heightened hostility in West Asia kept global crude oil prices high. Devarsh emphasized that deepening geopolitical tensions, continuous capital outflow from domestic stocks, and high demand for the dollar by importers continue to exert structural pressure on the Indian Rupee and the stock market.
Asian stocks also declined due to new tensions in West Asia. Japan's Nikkei 225 index fell by 2.8 percent, and South Korea's KOSPI lost almost 6 percent. The Hang Seng index dropped by 1.3 percent.
Major American stock indices sharply declined as significant losses in technology stocks dragged down the entire market. Nasdaq fell by 2.2 percent, leading the decline, while the S&P 500 retreated by 1.2 percent, and the Dow Jones lost 0.97 percent. Devarsh Vakil noted that investors are growing concerned about high capital expenditures among tech giants without an obvious near-term return.
Alphabet shares fell by 7 percent, recording the steepest single-day drop since May 7, 2025, after the company raised its full-year capital expenditure forecast to approximately $200 billion. Tesla plummeted almost 15 percent, its worst day since March 10, 2025, after its second-quarter report showed negative free cash flow.
Shrikant Chouhan, Head of Equity Research at Kotak Securities, reported that Nifty formed a bearish candle on daily charts on Thursday, and intraday charts support the formation of a lower high, indicating further weakness from current levels. The weak structure may persist as long as the market trades below the 24,000 mark. In a downtrend, the market could slide towards the 23,650–23,550 level. On the other hand, at a level above 24,000, sentiment may change, and after that, the level might correct to 24,050–24,100.
Futures stock indices opened with a dip, reflecting weak global sentiment caused by escalating geopolitical tensions between the US and Iran. By 9:40 AM, the Sensex index fell by 447 points, or 0.59 percent, reaching 77,119, while Nifty dropped by 132 points or 0.57 percent, settling at 24,071.
During early trading, Sensex reached a low of 76,857.43, losing 712 points or 0.92 percent. Similarly, the Nifty index fell by 207 points or 0.86 percent, touching the 24,000.20 level. Among sectoral indices, Nifty Auto and Nifty Metal showed the largest losses, declining by 0.93 percent and 0.88 percent, respectively. However, Nifty IT moved against the general trend, showing a growth of 0.50 percent. Broader markets also corrected: Nifty Midcap 100 and Nifty Smallcap 100 fell by 0.39 percent and 0.35 percent.
The India VIX fear index jumped by 8 percent, exceeding the 13 mark, indicating increased market volatility in the near term. According to NSE data, the advance/decline ratio stood at 1,352/1,539, pointing to a negative bias.
The primary reason cited for the market decline was the tension in the Middle East. US military forces announced another round of strikes against Iran aimed at weakening its ability to freely attack commercial vessels passing through the Strait of Hormuz. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that mutual actions in the Middle East crisis have become the new normal. He emphasized that Iran's attempts to use geography for military purposes negatively affect energy importers like India, and President Trump's inconsistent stance on Iran has made stability a thing of the past.
Following new exchanges between the US and Iran, and ongoing uncertainty regarding the status of the Strait of Hormuz, crude oil prices rose. Brent crude futures climbed by $2.34 or 3.08 percent, reaching $78.35, while West Texas Intermediate (WTI) crude oil increased by $2.21 or 3.09 percent, totaling $73.62 per barrel. Vijayakumar considers crude oil price a critical factor, especially for India, and warns that a significant correction could occur if Brent crosses $90.
Concurrently, the rupee weakened by 37 points to 95.70 against the US dollar as the dollar strengthened and crude oil prices rose due to heightened Middle East tensions. The US Dollar Index (DXY), which measures the value of the USD against six major currencies, remained strong for the second consecutive day, trading around 101.10.
US government bond prices declined for the second week in a row, leading to yield increases to the highest levels since mid-May amid concerns over inflation and interest rates. Dwarish Vakil, Head of Primary Research at HDFC Securities, reported that the yield on 10-year Treasury bonds closed the week at 4.56 percent, up from 4.37 percent a couple of weeks ago. The yield on 30-year bonds reached 5.06 percent, higher than the previous 4.87 percent.
Asian markets also traded significantly lower due to geopolitical tensions and supply chain issues. At the last check, South Korea's Kospi led the decline, plunging 7 percent, followed by Japan's Nikkei 225, which fell 1.1 percent, and Australia's S&P/ASX 200 dropped 0.31 percent.
Sachin Gupta, Vice President of Technical Analysis Research at Choice Broking, noted that the immediate hurdle for Nifty remains the level around 24,400, which coincides with the 200-day EMA and is a critical resistance zone. A decisive breakout above this level could trigger a new rally towards the 24,600–24,800 marks. In the downtrend, 24,000 is expected to serve as immediate support, followed by the important level of 23,800. A sustained fall below 23,800 could increase the probability of a longer consolidation phase.
Gupta also added that derivatives data continues to show a positive backdrop. The Nifty Put-Call Ratio (PCR) sharply improved from 0.94 to 1.25, indicating aggressive selling of put options and strengthening bullish sentiment among derivatives traders. A high PCR suggests that market participants continue to build supportive positions at lower levels.
