Oil Price Surge and Middle East Tensions Weigh on Indian Equity Market

The Indian equity market is set for a cautious open as tensions in the Middle East escalate and oil prices rise. The Brent crude price has climbed above $97 per barrel, causing concerns over possible disruptions to global oil supplies.

The Reserve Bank of India (RBI) has removed concentration limits for Foreign Portfolio Investors (FPIs) investing in government securities through the General Route, aimed at reducing compliance burdens and facilitating greater foreign participation in India's government bond market. However, FPIs have sold shares worth Rs 15,116.06 crore in September so far.

The US stock market is also facing a cautious reopening after the Labor Day holiday, with Dow futures down about 323 points amid heightened Middle East tensions. The Federal Reserve's policy outlook has been complicated by the rise in crude prices and inflation concerns, with markets pricing in more than a 60% probability of a 25-basis-point rate hike at the September meeting.