Indian shares set for modest gains, but Mideast tensions keep investors wary

Indian shares are expected to open slightly higher on Monday following four consecutive weekly declines, although Mideast tensions may dampen risk appetite. Investors will closely monitor adjustments to pre-open session rules, which align the mechanism with the recently introduced closing auction session (CAS) that has caused significant market movements at the close.

The Nifty 50 futures were trading at 23,977.5 points as of 7:09 a.m. IST, hinting at a beneficial opening for the Nifty 50 index, which closed at 23,897.7 on Friday. The U.S. announced it had targeted three Iranian tankers on Saturday following Iran's firing of ballistic missiles at two American Navy ships, a development that deepened the already tense geopolitical situation between the two nations.

Iran pledged to intensify efforts to address the challenges posed by U.S. sanctions that have severely impacted its economy, while a high-ranking Iranian official cautioned of a "painful response" if faced with additional attacks. Brent crude futures climbed 0.4% to near $97 per barrel, while MSCI's Asia-Pacific index outside Japan rose 0.9%.

Asian equities rose after a strong U.S. jobs report bolstered confidence in global growth, though the Federal Reserve remained open to raising interest rates at its upcoming meeting. Ponmudi R, CEO of Enrich Money, cautioned that investors may remain cautious about making substantial investments due to ongoing geopolitical risks clouding the near-term outlook.

The Nifty 50 and Sensex have declined 2.7% and 2.5% over the past four weeks, respectively, as higher oil prices and rising global bond yields dampened sentiment. Foreign investors sold Indian shares worth 31.12 billion rupees ($329.38 million) on Friday, with a total of $782 million in share sales for the month of September.