Geopolitical tensions and crude surge weigh on markets

Weighed down by ongoing geopolitical tensions, continued weakness in the rupee, rising crude oil prices, and sustained selling from FIIs, amidst heightened volatility, Indian markets delivered a muted performance during the week ended. Midweek sharp sell-off on Thursday erased gains notched during the early part of the week.

The Sensex slipped 30.96 points, or 0.04 percent, to end at 74,532.96, while the Nifty declined 36.6 points, or 0.15 percent, to close at 23,114.50. The BSE Midcap and the Smallcap indices ended on a flat note. Spooked by the sudden resignation of chairman Atanu Chakraborty, HDFC Bank witnessed a sell-off, which wiped nearly Rs1 lakh crore in market capitalization.

Expectedly, FIIs were net sellers during the week, offloading equities worth Rs29,897.67 crore, continuing their selling streak in Indian equities for the fifth consecutive week. On the other hand, DIIs bought equities worth Rs30,641.90 crore. For the month of March, the equity segment has seen a net out flow of about $9.57 billion from FIIs so far.

The Indian rupee extended its decline for the third consecutive week, hitting an all-time low of 93.76 against the US dollar. The weakness in global equity markets following the war in West Asia, the steady depreciation of the rupee, and concerns surrounding the impact of high crude prices on India’s growth and corporate earnings contributed to the concern of FIIs.

Markets have been rattled as the escalating conflict in the Middle East has disrupted shipping and energy exports through the crucial Strait of Hormuz.

This narrow chokepoint between Iran and Oman normally carries around one-fifth of the world’s crude oil and liquefied natural gas supplies. In practical terms, oil equivalent to nearly 20 per cent of global demand passes through the strait every day.

The waterway has been effectively shut for the past seven days. Iran and Israel / USA trade threats, bombardment, even as Gulf neighbours of Iran face drone attacks. Economists have begun lowering India’s 2026 growth forecast to 6 per cent down from 7 per cent, citing high oil prices and the overall dampening of economic activity.

The closing of the Strait of Hormuz has disrupted supplies of essential commodities, including fertilizers, increasing nitrogen-based fertilizer prices (like urea) by 30-40 per cent. This directly affects India’s agricultural sector. Last week, Gold ($4,497/ounce) and silver ($67.90/ounce) prices crashed by 10.4 per cent and 15.8 per cent, respectively.

This unusual divergence between rising geopolitical risk and falling precious metal prices highlights deeper macroeconomic forces at play. During periods of sharp market stress, investors often prioritise liquidity above all else. This liquidity-driven selling has been a key factor in the recent correction, overpowering safe-haven demand. Additionally, much of the geopolitical premium was already factored into gold prices at the start of 2026.

The US Federal Reserve kept the interest rate unchanged, maintaining a target range of 3.5 per cent to 3.75 per cent. The central bank’s “dot plot” suggests a cut may be in the cards in 2026. Observers say that the recent data has revealed that economic growth in the back half of last year was extremely weak, the labour market seems to be on the precipice of disaster, and prices keep rising faster than anyone feels comfortable with. Fears of “stagflation” are back.

The Dow Jones Industrial Average, S&P 500, and the NASDAQ Composite indices continue to get beaten down. All three indices were down for the fourth consecutive week. Even Bitcoin tumbled below the $68,000 mark, indicating a broader risk-off mood across financial markets.

Investors’ hopes for a quick resolution to the Iran war are fading. With no end to the war in sight, investors should be on the defensive—not only against the bad news the war could bring, but also against the bad ideas the financial industry will be pitching.

For the coming week, a cautious and defensive approach is strongly recommended. Fresh aggressive buying should be avoided until clear signs of stabilization emerge. Traders should focus on protecting capital, maintaining lighter positions, and adopting a highly stock-specific approach. Any rebound should be used to reduce exposure rather than initiate fresh longs.

Be prepared to invest in a down market and to “get out” in a soaring market, as per the philosophy of Warren Buffett.

FUTURES & OPTIONS / SECTOR WATCH

Markets witnessed a very good bounce in the first half of last week. But the sharp fall in HDFC Bank share price and the news of bombing in Iran’s energy fields impacted markets, leading to a sharp midweek correction. Though the broader indices closed in the red with minor losses, several stocks are hitting 52-week lows.

On the weekly charts, Auto, Metal, and PSU Bank stocks showed strong performance, whereas Oil & Gas, FMCG, and Realty stocks faced selling pressure. In the options segment, the significant Call open interest for Nifty was observed at the 23,300 and 23,500 strikes level, whereas notable Put open interest was concentrated at the 23,000 strike. For Bank Nifty, significant

Call open interest was seen at the 54,000 strike, with substantial Put open interest at the 53,000 strike. Implied volatility (IV) for Nifty’s Call options settled at 21.83 per cent while Put options concluded at 22.46 per cent. The India VIX, a key indicator of market volatility, concluded the week at 22.80 per cent. The Put-Call Ratio Open Interest (PCR OI) stood at 1.15 for the week.

Nifty is attempting to stabilize near the 23,000–23,200 support zone following the recent sharp correction. However, the index continues to trade below key resistance levels, indicating that the broader structure remains weak. A decisive break below 23,000 could accelerate selling pressure, potentially dragging the index toward 22,700–22,500, with further downside risk extending toward 22,000–21,800.

On the upside, 23,300–23,400 remains the immediate resistance zone, while 24,000 stands as a stronger hurdle, and only a sustained move above this level would signal any meaningful recovery. While oversold conditions may lead to intermittent pullbacks, these are likely to face resistance at higher levels.

The coming week is a truncated trading week due to the Ram Navami holiday on Thursday; the markets are likely to see a cautious and possibly gap-driven start on all trading days. Traders are advised to closely track global news as market movements are currently driven by global events.

Stocks looking good are Coal India, Glenmark, Jindal Steel, Premier Energies, Waaree Energies, and ONGC. Stocks looking weak are Britannia, Hindalco, Hindustan Zinc, Shriram Finance, Tata Elexi, and Petronet.

(The author is a senior maket analyst and former vice-chairman, Andhra Pradesh State Planning Board)

STOCK PICKS

Strides Pharma Science Limited

Strides Pharma Science Limited is a global pharmaceutical company focused on developing and manufacturing niche finished dosage formulations. The company is focused on the development and manufacture of IP-led niche finished dosage formulations.

The company operates through two segments: Pharmaceutical and Bio-pharmaceutical. Its geographical segment includes Africa, Australia, Asia (excluding India), North America, Europe, India, and Others. The company manufactures a range of niche and pharmaceutical products, including a range of dosage forms such as liquids, creams and ointments, soft gels, sachets, tablets, and modified release dosage formats.

It has eight manufacturing units located in India (Bengaluru-two sites, Puducherry, and Chennai), Singapore, Italy (Milan), the United States (Florida), and Kenya (Nairobi). It is also engaged in manufacturing soft gelatin capsules. It develops and manufactures drugs in the anti-retroviral, anti-malarial, anti-tuberculosis, hepatitis, and other infectious disease drug segments for its institutional business.

It operates in over 100 countries and has built a strong global manufacturing presence, with seven facilities across four continents, four of which are approved by the US FDA. Buy on declines for medium term target of Rs1500.