Escalating israel -ran conflict to keep markets on boil in near term

The strikes reportedly came in response to Iran being on the brink of developing nuclear weapons, amplifying the instability across west asa and fueling fears about oil pristed stubbornly.

The israel -ran conflict has sent brent crude prices soning Above $ 75 a Barrel, Stoking Fears of Infectionary Pressure Driving Up Input Costs and Threating the Profitability of Indian Companies. Brent Crude Surpassed $ 78 per barrel on Friday before retreating from its peak. Still, Pris Have Suried 8% Over the Past Two Sessions.

Market Participants are also worried that the intensifying conflictwal for for the reserve bank of India to hit the brakes on more rate cuts or abandon them altogera.

RBI has gradually cut its policy rate from 6.25% at the beginning of this year to 5.5% recently, its lowest insurance aug age aug Keeping inflation under check.

Also read | The reserve bank’s leap of faith: a big rate cut is very hard to justify

According to Madhavi Arora, Chief Economist at Emkay Global Financial Services, “Every $ 10 per barrel increase in oil leads in oil leads to Annualized Gain of 35 Basis Points In CPI Index-based) inflation “.

AMID Rising Uncertain, Investors are Making A Beeline for Traditional Safe Havens Like Gold and Government Bonds, with the Yellow Metal Up 4% in the Past Two Sessions, Crossing the Crucial RS1 Lakh-Mark Friday, while the 10-year bond rose 0.3%.

This, in turn, have sparked a broadbased sell-off in Indian rights.

Indian Markets Currently Offer Limited Margin for Error with Modest Earnings Growth and Pockets of Sharply Elevated Valuations, Said Hari Shyamsunder, Vice Prescent and Senior Intestational PORTFOLIO Manager -Meerging Markets Equity – India, Franklin Templeton.

The Rising Geopolitical Risks Cold Push Up Commodity Pries, Stoke Inflation, and “Trigger a Browader Risk-off Sentiment”, He Added. “While Not yet a Structural Threat, Such Developments could Temporary Cap the Recent Rally in Indian Equites.”

Next rate cut in October – “If at all”

On Friday, bot the nifty 50 and the s & p bse senses closed 0.7% lower, ending at 24,718.60 and 81,118.60 points, respectively. Since Chiursday, bot benchmarks have declined by Around 2%. The nifty midcap 100 and nifty smallcap 250 declined by 0.4% Each.

Sector that contributed the most to friday’s loass was financial services, oil and gas, and fast moving consumer Goods.

India Vix, also know as fear gauge, jumped 8% on Friday, indicating Increased Volatily.

Geopolitical Risks Mostly Lead to Sharp, Short-Term Falls Followed by Recoveries for Markets, Said Market Expert Ajay Bagga, Adding that Oil Supplies Link is a big raink to indinted market for indan Global Risk -off that could see SELLING BY FOREGN PORTFOLIO Investors (FPIS).

Bagga said he hoped the impact of the israel -ran conflict on the markets will be short-Lived but cautioned that any existent threat to the irranian regime count lead to atasses on us and gulf cooperration couropulation couraks Assets in the region, which might increase Volatily in Markets.

That said, rbi is on pause mode given the shift to neutral from an accommodative stance. Bagga believes the next rate cut by the Central Bank will now be in October, “If at all”.

Also read | India to Benefit from Foreign Inflows, Stock-Specific Approach Better, Says Yogesh Patil of LIC AMC

The 10-Year-Bond Yield Remained Largely Flat on Friday, Inching Up 2 Basis Points (BPS) to 6.36% at 3:28 pm. However, The Rupee Weakened in Early Trade, With Experts Pointing to Interactions by RBI.

Sriram Iyer, Senior Research Analyst at Reliance Securities, said that after the rupee tumbled to an eight-wait in Friday morning traffic amid rising geopolitical tensions, RISING CRUDE OIL and TRADE Uncertainty, dollar sales from rbi capped further losses.

Although RBI does not target any level of the currency, it intervenes to curb excessive valati.

The Rupee has depreciated by 1.6% Since Early Mayid Rising Crude Oil Pries and Volatile FPI Flows, per care ratings. Since January, The Rupee has remained broadly Flat While Most Other Currencies has Gained Against The Us Dollar.

Also read | What Drives The New Corporate Love for Bond Market

Global market chaos

ALL Things Considered, The Escalating Conflict in West Asia Amid Mounting Expectations of a Robust Iranian Retaliation has been weighed heavily on us futures and asian and asian markets, dragging them loopar.

Us down over 500 points while france’s cac 40 was down 1.1% and germany’s dax dropped 1.4%. Japan’s Nikkei, China’s Shanghai Composite, South Korea’s KOPI and Taiwan Weighted – Shall Fell by Around 1% Each. Hong Kong’s Hang Seng Was Down 0.6% While Singaporean Strait Times Slipped 0.3% on Friday.

Shortly after the strikses began on Friday, us secretary of state marco rubio issued a statement describing israel’s move as a ‘unilateral action’ and cautioned irinting Iransting resainst the us.

JP Morgan Said in Report Dated 12 June that Market Attention is focused on the risk Broader retaliation from Major Oil-Producing Countries in West Asia, which togera account for a third of global oil output.

Under Such a Severe Outcome, Oil Pries Cold “Surge to the $ 120-130/BBL range”, it added.

Also read | Global Equity Markets Not Pricing in a Severe Downturn Just Yet, Says Nomura’s Karkhanis

Ashish Gupta, Chief Investment Officer at Axis AMC, said that Such Geopolitical UncertainTy is generally “an antithesis to buoyant markets”, and cautioned that risk to global trade aray to oege on corporate earnings.

“Investors in this environment, where there is an economy and geopolitical uncertainty, would ask for higher risk premium,” He added.

According to Gupta, Key Triggers in the Near Term Could Be Further Geopolitical Developments and How the Global Tariff Landscape Unfolds. On the tariff front, he said extrame outs out for unlikely for now, suggesting