BY COMFORT OGBONNA
India’s benchmark equity indices traded largely flat on Tuesday as renewed U.S. military action in Iran dampened investor optimism over a near-term peace agreement, a day after markets had rallied to two-week highs on hopes that the months-long conflict could soon end.
The muted performance reflected growing caution among investors who are closely tracking developments in the Middle East, where tensions continue to disrupt global energy flows and drive volatility in oil markets.
The Nifty 50 index edged up 0.11% to 24,057.95 in early trade, while the BSE Sensex rose slightly by 0.06% to 76,535.45 at around 10:15 a.m. IST. Both benchmarks fluctuated between marginal gains and losses throughout the session as traders weighed geopolitical risks against recent market strength.
Broader market indices showed slightly better momentum, with mid-cap stocks rising 0.3% and small-cap shares advancing 0.9%, indicating selective buying interest despite overall caution in large-cap names.
Market sentiment weakened after reports of fresh U.S. strikes targeting alleged missile launch sites and vessels suspected of laying mines in southern Iran. The developments came just a day after optimism had surged that diplomatic negotiations between Washington and Tehran were making progress toward ending the conflict.
U.S. Secretary of State Marco Rubio said on Tuesday that negotiations with Iran could still take several days, further tempering expectations of an immediate breakthrough. His comments followed military actions that the United States described as necessary to protect its troops from potential Iranian threats.
Analysts said the shifting tone from both diplomatic and military fronts has created uncertainty for global investors, making it difficult to assess whether the conflict is moving toward resolution or further escalation.
According to Devarsh Vakil, head of prime research at HDFC Securities, optimism surrounding a potential U.S.–Iran peace agreement has been weakened by renewed hostilities, which suggest that a final settlement may take longer than markets had initially expected.
Vakil added that while Washington has framed its military operations as defensive in nature, the developments have raised concerns that geopolitical risks could persist for an extended period.
India remains particularly sensitive to fluctuations in global crude oil prices due to its heavy reliance on imports. As the world’s third-largest importer and consumer of oil, the country has been directly impacted by disruptions linked to the conflict and the partial closure of the Strait of Hormuz, a key global shipping route.
Rising energy costs have already begun feeding into domestic fuel prices, with India increasing petrol and diesel prices again on Monday. This marked the fourth fuel price hike in May, as authorities attempt to offset losses driven by elevated international oil prices.
Brent crude futures rose around 2.1% to approximately $98.2 per barrel, keeping pressure on inflation expectations and adding to concerns about higher input costs for transportation and industry in India.
Traders also remained cautious ahead of the expiry of derivatives contracts on both the National Stock Exchange and Bombay Stock Exchange, events that typically contribute to increased volatility in short-term trading sessions.
Among individual stocks, Rail Vikas Nigam Ltd. declined 2.3% after reporting a drop in quarterly profit, reflecting weaker-than-expected earnings in the state-run infrastructure sector. Container Corporation of India also came under pressure, falling 5% following a decline in its fourth-quarter profit results.
Overall, analysts said Indian markets are likely to remain sensitive to geopolitical developments, crude oil movements and global risk sentiment in the near term, with investors balancing hopes of diplomatic resolution against the reality of ongoing uncertainty in the Middle East.
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