MUMBAI—India's benchmark equity indexes opened lower on Monday as heightened geopolitical tensions in the Middle East and a sharp rise in crude oil prices weighed on investor sentiment, while weakness in private banking stocks added pressure following recent quarterly earnings.
The NSE Nifty 50 fell about 0.4% in early trading to around 24,240, while the BSE Sensex declined about 0.6% to roughly 77,710, according to exchange data. The losses followed renewed concerns over the conflict involving the United States and Iran, which pushed oil prices higher and raised fears of inflationary pressures for major energy-importing economies such as India.
Private lenders led the decline after earnings announcements over the weekend. HDFC Bank fell more than 5% after investors reacted to a sharper-than-expected contraction in its net interest margin despite reporting quarterly profit broadly in line with expectations. Axis Bank and Kotak Mahindra Bank also traded lower, while ICICI Bank outperformed after reporting results that exceeded market expectations. The Nifty Private Bank index dropped more than 2% in early trade, dragging the broader financial sector lower.
Market participants also monitored crude oil prices, which climbed toward $90 a barrel as concerns grew over potential disruptions to shipping through the Strait of Hormuz. Higher oil prices are closely watched in India because they can increase import costs, widen the current account deficit and add to inflationary pressures.
The Indian rupee weakened against the U.S. dollar in early trading, reflecting stronger demand for the dollar and concerns that elevated crude prices could weigh on the country's external balances.
Broader Asian markets were subdued as investors assessed the geopolitical situation alongside corporate earnings and expectations for central bank policy. Analysts said uncertainty surrounding global energy supplies and the outlook for inflation continued to support a cautious approach to risk assets.
Despite weakness in the benchmark indexes, some energy producers advanced as higher crude prices improved the earnings outlook for oil exploration companies. Broader mid-cap and small-cap indexes were comparatively resilient during early trading, indicating that selling pressure was concentrated in heavyweight financial shares.
Investors were expected to continue monitoring developments in the Middle East, movements in crude oil prices and the domestic corporate earnings season for further direction during the trading session.
