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Indian equity benchmarks opened lower on Wednesday amid heightened geopolitical tensions in the Middle East, with investors concerned about the possibility of direct US involvement in the Israel-Iran conflict. Both the Nifty 50 and Sensex registered declines in early trade, reflecting widespread caution in global markets.

The Nifty 50 began the session at 24,797.15, a drop of 65.05 points or 0.26 per cent, while the BSE Sensex fell 269 points, starting the day at 81,313.9, a decline of 0.33 per cent. Weakness was evident across broader indices as well, with Nifty 100, Midcap, and Smallcap indices all trading lower.

On the sectoral front, nearly all Nifty indices opened in the red. Nifty IT declined by 0.34 per cent, Nifty Metal was down 0.10 per cent, and Nifty Auto slipped 0.08 per cent. Only Nifty Media and Nifty Realty managed to stay afloat in early trading.

Global Tensions

The market dip follows escalating tensions in the Middle East, now entering the sixth day. The situation deteriorated after former US President Donald Trump reportedly demanded an "unconditional surrender" from Iran — a position Tehran has firmly rejected.

Though Israel is said to have achieved several strategic military objectives and currently maintains air superiority over Iran, concerns remain about Iran's extensive missile capabilities. The resilience of Iran's nuclear infrastructure, despite leadership losses, has only added to the conflict’s complexity.

US Role Could Shift Market Trajectory

Market strategist Ajay Bagga highlighted the potential implications of American involvement. Speaking to ANI, he said, “The big question facing markets and friends and foes of both side alike is, ‘Will the US enter the war and bring its bunker buster armaments to bear on Iranian nuclear sites?’ That escalation will impact markets but if it happens, it will also lead to greater regional stability in the medium term.”

Oil Supply Fears Add To Market Stress

While Israel and Iran represent a small fraction of global GDP—less than 1 per cent—their strategic location and impact on oil supply chains mean any escalation could disrupt global energy markets. This remains a core concern for investors watching the situation unfold.

Awaiting Fed Signals

Adding to the cautious sentiment is the US Federal Reserve’s policy meeting scheduled for later in the day. Disappointing retail sales figures for May have tempered expectations of a near-term rate cut, though a more accommodative tone from the Fed remains on the table.

Mixed Cues From Asia

Asian markets offered a mixed picture. While Singapore and Hong Kong indices were trading in the red, others posted gains. Japan’s Nikkei 225 rose 0.62 per cent, Taiwan’s Weighted Index gained 0.60 per cent, and South Korea’s KOSPI advanced 0.54 per cent, providing a counterbalance to the risk-off mood.