Gift Nifty signals weak start as Middle East tensions rattle global market

Analysts said elevated Brent crude prices and concerns around the Strait of Hormuz could impact India’s inflation outlook, trade deficit and macroeconomic stability

Indian equity markets are likely to open on a weak note amid a negative global trend, driven by the escalation of the war between the US and Iran. Gift Nifty 23,540 signals a gap-down opening of 120 points.

“We see significant downside risk for Indian equities until the resolution of the Gulf conflict and reopening of the SoH. However, we expect normalcy to return in the coming weeks and see any weakness as an entry opportunity, with discretionary and industrials as key overweights,” said Emkay Global Research in a note. The Nifty corrected 2.5% last week, with Pharma and FMCG emerging as key outperformers. The situation around the SoH remained volatile, keeping Brent in the $105-110/bbl range. The continuation of the West Asia conflict is beginning to weigh on India’s macrofinancial stability, with sustained CAD pressure and continued selling by FPIs. Pump prices were finally hiked by ₹3/ltr, but we expect more as under-recoveries persist at ₹17-18/ltr, it added.

Meanwhile, equities across Asia-Pacific are down sharply in early trading on Monday.

Rising crude prices and rupee weakness weigh on sentiment

The biggest concern continues to be elevated crude oil prices and currency pressure. “Any further escalation in geopolitical tensions could push oil prices higher again, increasing imported inflation risks for an oil-dependent economy like India. This also keeps pressure on the Indian rupee and overall market sentiment,” said Hariprasad K, SEBI-registered Research Analyst and Founder, Livelong Wealth.

Ponmudi R, CEO of Enrich Money, a SEBI-registered online trading and wealth-tech firm, said Indian markets are likely to open on a cautious note as renewed geopolitical rhetoric from the U.S. continues to weigh on global investor sentiment. U.S. President Donald Trump issued a fresh warning stating that the “clock is ticking for Iran,” signalling growing impatience over the pace of negotiations and increasing uncertainty surrounding the ongoing US–Iran situation and the Strait of Hormuz. This remains a key overhang for global financial markets.

Foreign institutional investors are also turning increasingly defensive as rising US bond yields and global uncertainty continue to trigger capital rotation away from emerging markets. Elevated crude prices and rupee weakness are beginning to compress margin visibility across multiple sectors, particularly consumption-driven, import-sensitive businesses.

Trade deficit, rupee pressure add to market concerns

External sector data also remained concerning, with India’s trade deficit widening significantly to $28.38 billion in April from $20.67 billion in March, reflecting a sharp increase in imports amid elevated commodity prices, said Ajit Mishra, SVP, Research, Religare Broking Ltd. Currency markets remained volatile as the rupee weakened to a record low near 96 against the US dollar before settling marginally higher. Rising crude oil prices and continued foreign fund outflows kept pressure on the domestic currency throughout last week, he added.

Key macro and earnings triggers to watch this week

According to him, key events to watch are:

The upcoming week is expected to remain highly sensitive to macroeconomic and geopolitical developments.

Participants will closely monitor developments in the ongoing US–Iran conflict and their implications for crude oil prices, inflation, and global risk sentiment. Movements in energy markets and the rupee will continue to influence near-term market direction.

On the domestic front, investors will track Infrastructure Output data for April 2026, scheduled for release on 20 May, which will provide insights into industrial activity and economic momentum.

Additionally, the flash HSBC Manufacturing PMI, Services PMI, and Composite PMI data will be closely watched for indications on demand conditions, business activity, and inflationary pressures.

Foreign exchange reserves data will also remain important, especially amid continued pressure on the rupee and rising import costs.

Ongoing Q4 FY26 earnings announcements and management commentary on margins, pricing power, and demand outlook will continue to drive stock-specific action across sectors.

Published on May 18, 2026