Gift Nifty futures plunged around 2% on Thursday, 27 May following fresh escalation in the ongoing conflict between the United States and Iran. According to reports from LiveMint, this indicates that Indian stock markets are likely to witness a sharply negative start on Friday, 29 May. Indian stock markets are closed today on account of Bakri Id, with exchanges also shut on May 1 for Maharashtra Day earlier in the month.
The decline came after fresh US military strikes on an Iranian military site overnight heightened concerns around the three-month-long conflict, even as diplomatic talks between Washington and Tehran continued. As reported by LiveMint, Iran's Revolutionary Guards struck a US airbase at around 4:50 a.m. local time, while Kuwait reported missile and drone attacks, adding to fears that the conflict may be expanding across the Middle East. US officials said Central Command forces intercepted and destroyed four Iranian one-way attack drones near the Strait of Hormuz after they were deemed a threat to commercial shipping and US military assets.
The geopolitical escalation immediately triggered a sharp rally in oil prices, with Brent crude climbing 3% to about $97 per barrel as US forces carried out airstrikes on an Iranian military site and imposed new sanctions to prevent Tehran from profiting from vessels transiting the Strait of Hormuz. According to The Times of India, oil prices surged over 2% on Monday after Israel ordered additional troop deployments into southern Lebanon, escalating tensions with the Iran-backed Hezbollah group despite a ceasefire announced more than six weeks ago. US crude futures (WTI) climbed by 2.71% to $89.73 a barrel, while Brent crude futures gained 2.37% to $93.28 a barrel, as reported by Reuters. The Israel-Lebanon conflict has become the most significant spillover from the Iran war, with the confrontation beginning on March 2 when Hezbollah started launching rockets and drones into Israel in support of its ally, Iran.
Asian equity markets also came under pressure amid the rising uncertainty, with Hong Kong's Hang Seng index falling 1.42%, South Korea's KOSPI declining 1.01%, and Japan's Nikkei 225 slipping 0.62% in Thursday's trade. As reported by LiveMint, Gift Nifty 50 futures tumbled around 2% to 23,580, indicating a strong gap-down opening for benchmark indices when domestic trading resumes on Friday.
Indian benchmark indices had already ended lower in the previous trading session amid concerns over Iran-US tensions and weakness in the rupee, with the Sensex declining 142 points to close at 75,868 and the Nifty 50 slipping 7 points to settle at 23,907. Despite the weak closing, India VIX — the market's volatility indicator — fell 6% to 15.24, indicating that panic levels remained relatively contained, according to LiveMint.
