INDIA STOCKS-Indian shares set for weak start as oil-led selling grips Asian markets

March 23 (Reuters) - Indian equities are poised for a sharply weaker open on Monday, mirroring a broad risk-off move across Asia as escalating U.S.-Iran tensions kept oil prices elevated and deepened concerns over growth and earnings outlook.

GIFT Nifty futures GIFc1 were trading at 22,790 around 8:17 a.m. IST, indicating to 1.4% decline for the Nifty 50 from Friday's close of 23,114.50.

The selloff reflects a rapid increase in risk aversion. Asian markets .MIAPJ0000PUS fell 2.7% as tensions in the Middle East intensified, undermining hopes of a near-term de-escalation in the U.S.-Israeli conflict with Iran, now in its fourth week.

Iran warned on Sunday that it could target the energy and water systems of Gulf neighbours if U.S. President Donald Trump acted on his threat to strike Iran's electricity grid in 48 hours, unless Tehran fully reopened the Strait of Hormuz, amplifying fears of a broader regional disruption.

Brent crude hovering near $112 a barrel poses a particular challenge for India, one of the world's largest oil importers. Persistently high oil prices could fuel inflation, widen external imbalances, weaken the rupee, and extend foreign capital outflows.O/R

The impact is already evident. Foreign portfolio investors have sold $9.57 billion worth of Indian equities so far in March, putting the month on track for the heaviest outflows since October 2024.

The rupee INR=IN slid past 93-per-dollar level on Friday, in its steepest weekly fall in more than three years, while government bonds are also expected to remain under strain. The Nifty 50 .NSEI and Sensex .BSESN have declined 8.2% and 8.3%, respectively, this month.

HDFC Bank HDBK.NS, India's largest private lender and the heaviest-weighted stock on the benchmarks, will remain in focus after sliding 7.43% during two sessions following the resignation of part-time chairman Atanu Chakraborty over differences related to "values and ethics."

STOCKS TO WATCH

State Bank of India SBI.NS says the Income Tax Department raises demand of 63.38 billion rupees ($676.52 million) for assessment year 2023-24

India directs Tata Power's TTPW.NS 4-gigawatt imported-coal plant in Gujarat to run at full capacity from April 1 until June 30, citing higher summer demand, as per a government order seen by Reuters

Ceigall India's CEIG.NS unit emerges as the lowest bidder for a NHAI tender worth 6.03 billion rupees

Microfinance lenders will be in focus after the government approved a 200-billion-rupee credit guarantee scheme for microfinance firms to address the stress in the sector

($1 = 93.6850 Indian rupees)