Indian stocks and the rupee are bracing for a turbulent open after US-Israel strikes against Iran sent oil prices surging the most in four years. Asian stocks are down while Nifty futures dropped as much as 1.7%, signaling a gap-down start as investors price in higher energy costs — a particular concern for India, which imports nearly 90% of its oil. Sectors sensitive to moves in oil prices — such as aviation, paints, tires, and specialty chemicals — will likely face selling pressure today.

Beyond Iran's own 3.3 million barrels a day output, the bigger worry is the effective closure of the Strait of Hormuz, which carries about a fifth of the world's crude. About half of India's oil imports pass through it. Any disruption could push Brent toward $80 a barrel, according to a Bloomberg Intelligence analysis, lifting inflation risks and widening the current account deficit. Traders expect a weak open as markets digest the escalation, watching the Nifty around 25,000 — a psychological level and technical support below which panic could set in.

The rupee is already the worst performer in Asia this year, with traders seeing support near 91 per dollar where the Reserve Bank of India has been active. The nervousness may also hit the debt market, where the benchmark 10-year yield climbed to a one-year high of 6.78% in early February. The RBI has reduced its short-term dollar forwards book to the lowest level since September 2024, creating room to step into the currency market more aggressively if needed.