Markets may open in red as Israel-Hamas war intensifies, but recover later

The situation regarding recent attacks on Israel is evolving, and market experts advise caution and patience before making any decisions.

The market is likely to open gap-down on October 9, as war in West Asia fuels a surge in crude oil prices and prompts a flight to safety from volatile global equities. Crude oil prices jumped 3-4 percent in the early morning trade, with Brent crude shooting past $87.4 a barrel and WTI crossing the $85.7 mark.

“We have to wait and watch the situation. Today the market may open lower, but we cannot judge how this will pan out going ahead,” Samir Arora, founder and fund manager at Helios Capital, told Moneycontrol. He steered clear of taking any large calls. “Last time, after the Russia-Ukraine war, we did that, but the market did not really go down as much as we thought.”

The US stock futures (S&P 500) fell 0.7 percent in early Monday trade, while Asian stocks traded mixed. Mainland Chinese markets weakened but Australian stocks were up. The Japanese and South Korean markets remained closed for a holiday. The Middle East equity indices fell on Sunday, led by a 6.4 percent drop on Israel’s benchmark TA-35 stock index, its biggest loss in more than three years.

“Finally, when the US markets were set for a reversal, we have the Israel war news, which has made market participants nervous. As expected, we see buying interest in gold and oil - something to keep an eye on is especially oil if it crosses $95 a barrel,” said Rahul Sharma, director at JM Financial Services.

“Bears may finally get a hard-landing that they have been hoping for,” he said, adding that it would be best to be a day trader until this crucial resistance is not taken out.

According to Samir Arora of Helios Capital, the overall market sentiment does look a bit weak because of rising yields. However, whether Israel by itself will trigger a big fall is a difficult call to make. “Any sharp fall, we will look at as a buying opportunity,” he told Moneycontrol.

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The situation regarding recent attacks on Israel is evolving, and market experts advise caution and patience before making any decisions. While there may be an initial market drop in response to the events, it's suggested to react rather than preemptively take action.

Any kind of war is not good, according to Sunil Singhania, Founder - Abakkus Asset Manager LLP. "The verbal counter from Israel has been very strong, but we need to watch if this conflict spreads to other areas like Iran. The area has always been prone to disruption and conflict. Oil prices have shot up in reaction," he said.

"It is not an event to be ignored. But it’s early days. We need to wait and watch the next few days. India has been resilient for thus far, but no market can remain immune to such global events," Singhania added.

Market experts also expect volatility to rise ahead of the upcoming corporate results and state elections in India.