Indian benchmark stock indices rose during Monday's early trading session, rebounding from their worst weekly performance in years. However, investors remained cautious as persistent conflict in the Middle East could keep crude oil prices above $100 per barrel.
As of 10:08 AM India Standard Time, the Nifty 50 index was up 0.2% at 23,189 points, while the BSE Sensex gained 0.18% to reach 74,697.2 points.
Nine out of sixteen major sectors advanced. In contrast, mid-cap and small-cap stocks declined by 0.2% and 0.7%, respectively.
The potential closure of the Strait of Hormuz, a critical global artery for oil and gas transportation, looms due to the conflict involving the U.S., Israel, and Iran.
Following calls from former U.S. President Donald Trump for other nations to help secure the Strait of Hormuz, Brent crude oil prices hovered around $104 per barrel.
Rising oil prices adversely affect India, the world's third-largest crude importer, by widening the fiscal deficit and fueling inflation, which in turn negatively impacts economic growth.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that even as the market rises, foreign portfolio investors may continue selling Indian equities.
Since the onset of the conflict, foreign portfolio investors have sold over $5 billion worth of Indian stocks in March alone, setting a record for monthly foreign outflows.
Citing the negative impact of higher crude prices on the economy and corporate earnings, brokerage firm Citi has lowered its year-end target for the Nifty 50 index from 28,500 to 27,000 points.
Monday's uptick in Indian markets mirrored gains among its Asian peers, which rose 0.4% on average.
Consumer stocks advanced 0.7%, and heavyweight financial shares climbed 0.6%, leading the gains in the Indian market.
Shares of IDBI Bank plunged 13.3% after media reports indicated that the Indian government is likely to set aside received bids for the sale of a majority stake in the bank.
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