Despite the rising geopolitical tensions, Indian equity benchmark indices opened in the green on Friday. The Sensex opened 78 points higher but soon erased its gains and slipped 106 points in early trade. The Nifty also turned negative. Early optimism faded quickly, with both benchmark indices trading on a largely flat note as investors remained cautious.

Why share market is falling today

Tensions rise in West Asia

The sharp escalation in the US Iran conflict, along with reports of fresh strikes by Saudi Arabia on Iran backed groups, has rattled global financial markets. The breakdown of the ceasefire has increased uncertainty, prompting investors to move away from riskier assets and seek safer investment options.

Rising crude oil prices add to market worries

Geopolitical tensions in West Asia have pushed Brent crude prices to around USD 88 per barrel amid fears of supply disruptions through key shipping routes such as the Strait of Hormuz and the Red Sea. For India, which imports a large share of its crude oil, higher prices could increase import costs, put pressure on company margins and widen the current account deficit.

Inflation fears return as rate cut hopes fade

The rise in oil prices has revived concerns over global inflation. Investors now expect major central banks, especially the US Federal Reserve, to keep interest rates higher for longer to control inflation. This has reduced expectations of early rate cuts and weighed on market sentiment.

Foreign investors continue to pull out money

Risk aversion has led foreign institutional investors to reduce their exposure to emerging markets, including India. At the same time, a stronger US dollar and elevated US bond yields have put pressure on the Indian rupee, making Indian equities relatively less attractive for overseas investors.

Expensive valuations trigger profit booking

Indian markets were already trading at relatively high valuations before the latest geopolitical developments. As uncertainty increased, market volatility also surged, prompting investors to book profits. The selling pressure spread across large cap, mid cap and small cap stocks, keeping benchmark indices under pressure.