Indian shares are expected to open lower on Tuesday as investors grow increasingly anxious over a prolonged Middle East conflict and elevated energy prices.
Concerns about the potential impact on inflation and interest rates are adding further pressure on market sentiment heading into the session.
Traders are weighing conflicting signals from the Middle East, with Iran suspending indirect negotiations with the US while President Donald Trump claimed talks are continuing at a rapid pace.
Trump also told CNBC that he did not care if the negotiations were over, adding another layer of uncertainty to the already volatile situation.
Lebanon’s announcement of a partial ceasefire between Hezbollah and Israel has done little to ease investor concerns about broader regional stability.
In a separate development, Trump signed a proclamation amending tariffs on some copper, aluminium and iron imports, which could carry implications for global trade flows.
Benchmark indexes Sensex and Nifty each fell around 0.7 percent on Monday amid continued foreign institutional investor selling and Israel-Lebanon tensions.
The rupee fell by 10 paise to close at 94.95 against the greenback despite dollar sales from state-run banks on behalf of the RBI.
Foreign investors net sold shares worth Rs 3,912 crore on Monday, while domestic institutional investors net bought shares worth Rs 5,109 crore, according to provisional exchange data.
This follows a significant outflow on May 29, when foreign investors net sold Indian equities worth Rs 21,106 crore, the highest single-day outflow in at least two years, amid MSCI’s May index rebalancing.
Asian markets were broadly lower as uncertainty over ceasefire talks between Washington and Tehran and the potential reopening of the Strait of Hormuz offset renewed optimism around artificial intelligence.
Gold was subdued at $4,482 an ounce while Brent crude futures traded below $95 a barrel after climbing more than 4 percent during the overnight US trading session on supply disruption concerns.
Iran had earlier suspended all indirect talks with the US and announced it would pursue “complete closure of Strait of Hormuz” in response to Israeli attacks in Lebanon and recent US strikes on the Islamic Republic.
Overnight, US stocks climbed to record closing highs after Nvidia unveiled a new AI chip for personal computers and Trump said a memorandum of understanding with Iran could be reached within the next week.
US manufacturing activity also expanded for the fifth consecutive month in May, hitting its highest level in four years, according to economic data released during the session.
The tech-heavy Nasdaq Composite gained 0.4 percent, the S&P 500 rose 0.3 percent and the Dow Jones finished marginally higher on the day.
European stocks hit a one-week low on Monday as renewed Middle East tensions dampened hopes for an imminent peace deal, with the pan-European STOXX 600 falling 0.8 percent.
The German DAX dipped 0.4 percent, France’s CAC 40 shed half a percent and the UK’s FTSE 100 declined 0.7 percent across Monday’s European session.
