Indian stocks likely to remain under pressure as crude oil, US yields rise

Indian stocks are expected to remain under pressure due to rising crude oil prices and increasing U.S. treasury yields, according to market experts. The geopolitical tensions between the U.S. and Iran have added to the concerns, as the conflict remains unresolved despite President Trump's claims of an immediate resolution after the midterm elections.

WTI crude oil prices have surged to between $96 and $97 per barrel, while Brent crude is trading above $101.50 per barrel, causing a rise in U.S. Treasury yields. This combination of high energy prices and firming bond yields is likely to suppress risk appetite and negatively impact emerging-market equities, including India.

Ponmudi R, CEO of Enrich Money, emphasized that geopolitical risks are still a significant focus. He noted that while U.S. President Trump suggested the conflict with Iran could end immediately, the uncertainty surrounding the path to de-escalation keeps investors cautious and the geopolitical risk premium embedded in energy markets.

Asian equities, including the Nifty, which opened 50 points lower, are following the global downtrend. Japan's Nikkei 225 and South Korea's Kospi also fell by more than 1% in early trade, trailing Wall Street's losses and those of European markets the previous day. The gloomy outlook is anticipated to impact domestic sentiment at the market opening.

Investors are anticipated to monitor U.S. inflation data closely to gauge the Federal Reserve's policy direction. A more substantial-than-expected reading could strengthen the case for prolonged higher interest rates, potentially maintaining elevated Treasury yields and restricting risk appetite in global equity markets. Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, highlighted that the market's reaction to the 23,400-23,300 zone will be crucial in determining whether the decline deepens or if bargain buying triggers a technical recovery.

The ongoing U.S.-Iran hostilities and persistent disruptions to global oil supplies are the primary sources of risk, with investors concentrating on inflation, energy prices, and the overall macroeconomic outlook.