Nifty 50 extended gains for a second week, closing above 18,000 points Friday, but analysts warn volatility looms as crude oil prices surge over US-Iran tensions. The benchmark index rose 2.3% this week, driven by banking and IT sector strength, though rising energy costs threaten near-term momentum.

Crude oil futures climbed 8% last week to $82 a barrel after Washington and Tehran exchanged threats over nuclear program talks. This spike directly impacts India's oil-import-dependent economy, where fuel prices already consume 12% of corporate earnings. While domestic manufacturing and tech exports remain resilient, the global energy shock could erode profit margins for energy-intensive industries.

Central bank officials have signaled readiness to intervene if market swings threaten stability. However, the Federal Reserve's hawkish stance complicates relief efforts, as rate hike expectations remain elevated despite inflation cooling. Investors now monitor Brent crude benchmarks closely, with any escalation in Strait of Hormuz shipping risks posing systemic danger.

The Indian rupee weakened 0.9% against the dollar this week, reflecting dual pressures from higher import bills and foreign portfolio outflows. While state-owned banks like HDFC Bank and ICICI Bank show relative stability, commodity-linked stocks face heightened scrutiny. Market watchers emphasize that sustained oil volatility could trigger broader corrections unless geopolitical de-escalation materializes.