Stock market is expected to react negatively when trading resumes, with analysts cautioning that escalating geopolitical tensions in the Middle East could weigh heavily on investor sentiment and trigger a volatile start to the week, according to market experts quoted by PTI.
The US and Israel attacked Iran on Saturday, while Iranian state media confirmed early Sunday that Iran’s Supreme Leader Ayatollah Ali Khamenei was killed in the attack, sharply intensifying geopolitical risks.
Market participants said the extent and duration of the conflict will determine how deep and prolonged the impact on equities could be. Apart from geopolitics, investors will also track macroeconomic data, global market cues and foreign investor activity during the holiday-shortened trading week, with markets closed on Tuesday for Holi.
Sentiment has already turned fragile after the weekend escalation, Santosh Meena, Head of Research at Swastika Investmart Ltd, said.
“For an oil-importing economy like India, sustained elevated crude prices pose risks to inflation, fiscal balance, and rate-cut expectations. This external shock has emerged at a technically vulnerable moment for the market,” Meena said.
He added that markets are likely to open with a cautious to negative bias amid geopolitical uncertainty and rising crude oil prices.
Investors will simultaneously react to domestic triggers including Q3 GDP data and monthly auto sales numbers, while upcoming IIP and PMI readings will further shape expectations around economic momentum.
“Globally, key economic releases from the US and China, along with the trajectory of crude prices, will influence risk appetite. The direction of FII flows will remain the primary driver for index movement in the near term,” Meena said.
Brent crude, the global oil benchmark, climbed 2.87 per cent to $72.87 per barrel, reflecting rising energy market concerns.
Highlighting the broader economic implications, Manoranjan Sharma, Chief Economist at Infomerics Ratings, said the conflict could affect global stability.
“The simmering tensions between the United States, Israel, and Iran escalated sharply on February 28, 2026, significantly affecting global energy security and economic stability,” Sharma said, adding that higher energy prices are already creating inflationary pressures for India.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, warned that crude prices remain the key risk factor.
“The near-term impact will be negative. Crude has spiked, and if the crude price remains high for an extended period of time, our balance of trade and balance of payments will be impacted since we import around 85 per cent of our oil requirements,” he said.
He added that the medium-term market trajectory would depend on how long the conflict persists. “The market will react very negatively,” Vijayakumar said.
Analysts also noted that markets ended the previous week under pressure. The BSE Sensex declined 1,527.52 points or 1.84 per cent, while the Nifty fell 392.6 points or 1.53 per cent amid geopolitical concerns and weakness in technology stocks, Ajit Mishra, SVP, Research at Religare Broking Ltd, said.
Ponmudi R, CEO of Enrich Money, said investors will closely watch domestic indicators such as manufacturing and services PMI data, industrial production figures and monthly auto sales for signs of demand resilience.
(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
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