Geopolitical Risk Takes Centre Stage, RBI Comes to the Rupee Rescue

U.S. equity markets ended last week on a negative note, with the S&P 500 down about 2.1% and the Nasdaq Composite slipping about 3.2%, marking the Nasdaq’s worst weekly performance since the start of the U.S.–Iran conflict.

The S&P 500 closed at 6,369, suffering its fifth consecutive weekly loss and entering its longest losing streak in nearly four years.

Equity weakness was driven largely by renewed tensions in the Middle East, with Iran‑related headlines and fears of a prolonged conflict weighing heavily on risk appetite.

Rate‑sensitive sectors bore the brunt of the sell‑off. Overall, the week underscored a shift toward risk‑off positioning, with traders repricing the odds of an extended geopolitical standoff and higher-for‑longer rates.

Crude Oil jumped after Yemen’s Iran-aligned Houthi launched missile and drone strikes on Israel over the weekend, widening the Middle East conflict. Brent crude surged, putting it on track for a record monthly gain as the Strait of Hormuz remains largely shut, disrupting an estimated 15–16 million barrels of daily oil flow.

Over the past 48 hours, the war between Israel, the United States, and Iran in the Gulf has intensified, with fresh missile and drone attacks across the region amid stalled diplomacy. Iran has continued to fire missiles and drones at Israeli‑held territory and Gulf‑based US military facilities, while Israel and the US have carried out retaliatory strikes on Iranian missile and nuclear‑related sites. The conflict has left the Strait of Hormuz under intermittent Iranian naval pressure, with ripple effects unsettling global energy markets.

US‑backed diplomatic outreach and Gulf‑led shuttle diplomacy have gained modest momentum, but no ceasefire or de‑escalation has been announced yet.

Indian benchmarks extended their decline for the fifth consecutive week, marking one of the most prolonged periods of weakness in recent times. The Indian Rupee hit a fresh record low on Friday, touching the 93.98 level against the US Dollar, further dampening investor confidence.

RBI comes to the Rupee Rescue:

The RBI imposed a uniform $100 million limit on the net open foreign exchange positions of banks, replacing the previous flexible cap of 25% of capital to stifle speculative “long-dollar” bets. Banks have been directed to unwind large currency positions by April 10, a move designed to trigger a temporary surge in dollar supply and provide immediate relief to the Rupee. RBI shifted its strategy from direct market intervention to regulatory tightening to preserve its “war chest.”

Indian equity markets face a weak open, with a 1% to 1.5% drop expected amid flaring geopolitical tensions and a spike in crude oil prices. Technically, 23,465 remains a key resistance level, with 22,471 as the nearest support.