Indian markets are expected to begin the week on a cautious note, with benchmark indices likely to witness sharp opening losses amid a deteriorating global risk environment driven by geopolitical tensions in the Middle East and a renewed spike in crude oil prices.

Early trade indicators suggested heightened volatility, with GIFT Nifty falling nearly 150 points to 23,558, pointing toward a weak start for domestic equities after Friday’s subdued close. The weakness comes at a time when investors are already grappling with concerns around inflation persistence, currency depreciation and slowing global growth momentum.

On Friday, both the Sensex and Nifty ended lower, snapping a brief two-session recovery. Selling pressure was visible across metal stocks, PSU banks, oil-sensitive sectors and real estate counters. The Sensex closed lower by 160.73 points at 75,237.99, while the Nifty settled at 23,643.50, down 46.10 points. The rupee also remained under pressure and touched a record intraday low of 96.14 against the U.S. dollar, highlighting the broader macro stress linked to rising import costs and foreign outflows.

The latest trigger for market anxiety has emerged from the Gulf region, where renewed drone attacks and continuing disruption around the Strait of Hormuz have raised fears of prolonged supply-side risks in the global energy market. The Strait remains one of the world’s most critical oil shipping routes, and any sustained disruption there directly impacts global crude availability and freight costs. Investors are increasingly pricing in the possibility that energy prices could remain elevated for longer than previously anticipated.

Crude oil markets reacted sharply. Brent crude moved above $111 per barrel, while U.S. WTI crude climbed close to $108 per barrel after already recording strong gains last week. The move is significant for India because the country imports a majority of its crude requirements. A sustained rise in oil prices typically widens the current account deficit, pressures the rupee and complicates the inflation outlook for policymakers.

The market’s concerns are not limited to energy alone. Investors are also watching the broader geopolitical rhetoric between the United States and Iran after U.S. President Donald Trump warned that the “clock is ticking” for Tehran to reach a deal. The absence of diplomatic progress has increased fears that the standoff could intensify further, adding another layer of uncertainty to already fragile global markets.

Asian markets reflected the nervous sentiment. Japan’s Nikkei fell over 1 percent after a weak performance last week, while South Korean equities also traded lower. MSCI’s broad Asia-Pacific index outside Japan declined nearly 0.9 percent, indicating broad-based risk reduction by global investors.

U.S. futures also pointed to weakness ahead of a crucial earnings cycle led by major technology companies, including Nvidia. S&P 500 futures and Nasdaq futures traded lower in early Asian hours, while European futures also declined sharply. The synchronised weakness across regions suggests investors are shifting toward defensive positioning amid uncertainty over inflation, energy costs and geopolitical stability.

For Indian markets, the immediate concern remains whether higher oil prices begin feeding into domestic inflation expectations once again. India has benefited in recent quarters from moderating inflation and relative stability in commodity prices. However, another sharp rise in energy costs could disrupt that trend and potentially delay expectations of monetary easing.

The government’s latest move to curb silver imports is also being interpreted as a measure aimed at managing external account pressures and stabilising the rupee. While the direct market impact may remain limited in the short term, it reflects growing policy sensitivity toward rising import-related outflows.

Market experts believe volatility may remain elevated in the near term. Ponmudi R, CEO of Enrich Money, said markets are likely to remain highly news-sensitive due to the evolving geopolitical situation and rising crude prices. He noted that oil remains one of the biggest macro risks for India because of its direct influence on inflation, currency movement and corporate margins.

From a technical perspective, analysts expect Nifty to remain in a fragile recovery zone. The 23,500-23,400 range is emerging as an important near-term support area, while resistance is seen around 23,900-24,000. Bank Nifty also continues to show signs of weakness, with resistance around the 54,300-54,500 zone.

The broader market picture now depends heavily on whether crude prices stabilise and whether foreign institutional investors maintain buying interest. FIIs have recently shown intermittent buying activity after a prolonged selling phase, but analysts believe sustained inflows are necessary for restoring confidence and supporting any meaningful market rebound.

For sectoral trends, oil marketing companies, aviation firms, paints and other crude-sensitive businesses may remain under pressure if oil prices continue rising. On the other hand, upstream energy companies could see renewed investor interest amid stronger crude realisations.