Indian Stocks Seen Flat as Crude Holds Near $87 on Iran Tensions

State-run oil marketing companies–Indian Oil, Bharat Petroleum, and Hindustan Petroleum–face the sharpest margin compression if crude stays above $85, analysts at Kotak Institutional Equities wrote in a note Wednesday. They cut their earnings estimates for the sector by 4-7% for the current fiscal year.

Defense stocks drew buying interest in pre-market activity. Shares of Bharat Electronics and Hindustan Aeronautics were indicated higher on expectations of increased government spending on border security and naval assets.

Foreign portfolio investors sold a net $240 million in Indian equities on Wednesday, provisional exchange data showed. That was the largest single-day outflow in three weeks. Domestic institutional buyers absorbed roughly half that amount.

The weekly U.S. crude inventory report is due later Thursday. A bigger-than-expected drawdown would add to the upward pressure on prices.