Sensex, Nifty Likely to Open Weak as Oil Prices Spike

Global stock markets are poised for a sharply negative reaction when trading resumes on March 3, 2026 (with Asian and Indian markets opening earlier), as analysts warn of heightened volatility and risk-off sentiment stemming from the escalating US-Israel-Iran conflict that has seen the killing of Supreme Leader Ayatollah Ali Khamenei and retaliatory strikes across the region. The crisis has already disrupted oil shipments through the Strait of Hormuz, with an attack on a tanker carrying Indian crew members adding to supply fears. Major indices in the Gulf opened lower on Sunday, with Kuwait suspending trading, while Wall Street futures and European markets signaled declines ahead of Monday's open.

Analysts attribute the bearish outlook primarily to surging oil prices, which have climbed to around $73 per barrel for Brent crude amid fears of prolonged disruptions—potentially pushing levels toward $80–$100 if the Strait of Hormuz faces sustained threats or blockades. This energy shock threatens to fuel inflation, squeeze corporate margins, and prompt investors to shift toward safe-haven assets like gold, US Treasuries, the US dollar, and the Swiss franc. In India, where crude imports account for about 85% of needs, experts from firms like Geojit Investments and Swastika Investmart predict a cautious to negative opening for the Sensex and Nifty, with heightened volatility as geopolitical uncertainty compounds existing pressures from recent market corrections.

The impact on equities is expected to be most pronounced in energy-sensitive sectors, airlines (hit by airspace closures and flight suspensions), and broader risk assets, while defense and aerospace stocks may see relative gains from increased military spending. Indian benchmarks, already down significantly year-to-date—the Sensex by around 4.58% and Nifty by 3.70%—face added downside risks, with some forecasts pointing to a gap-down start and potential tests of key support levels like Nifty's 25,000. The extent of the sell-off will hinge on the conflict's duration and severity; a quick de-escalation could limit damage, but prolonged hostilities risk broader economic fallout, including higher input costs and weakened global growth.

Also Read: Putin Sends Condolences, Denounces Killing of Iran’s Khamenei

Gulf and Middle Eastern markets provided an early glimpse of the turmoil, with declines in regional indices reflecting investor pricing of a higher geopolitical risk premium. Global strategists, including those from Natixis and Barclays, describe a "haven-first" approach dominating trading desks, as money flows out of equities into protective positions. The International Energy Agency and OPEC+ are closely monitoring developments, with discussions on potential output adjustments amid shipment halts by major traders.

As the crisis remains fluid—with ongoing exchanges of fire and no immediate signs of restraint—market participants are bracing for sharp swings. Analysts emphasize that while short-term pain appears likely, historical patterns show geopolitical shocks often lead to temporary volatility before stabilization, though the unique risks here, including threats to critical oil infrastructure, could prolong uncertainty and pressure valuations across asset classes. Investors are advised to monitor oil benchmarks, official statements from involved nations, and central bank responses for cues on the trajectory ahead.

Also Read: Israel Defense Forces Releases Aerial Footage of Strike in Central Tehran