Britain’s benchmark FTSE 100 index remained little changed in early trading Monday, March 16, 2026, as investors positioned cautiously ahead of this week’s Bank of England policy meeting while digesting the fallout from elevated oil prices and ongoing Middle East tensions.

The FTSE 100 stood around 10,261 shortly after the London open, virtually flat from Friday’s close of 10,261.15, which marked a 44-point or 0.43% decline. The index has now declined for three consecutive sessions, though it logged only a modest 0.2% loss for the week ending March 13. Futures had pointed to mild consolidation overnight, reflecting broader global caution.

The latest close data from March 13 showed the index opening at 10,305.48, peaking at 10,367.36 and dipping to a low of 10,200.21 before settling lower on volume of roughly 814-817 million shares. That level sits about 6-7% below the 2026 peak near 10,935 hit in late February, but the benchmark remains up nearly 19% year-over-year and has demonstrated resilience relative to more tech-heavy indices elsewhere.

Persistent geopolitical risks in the Middle East, particularly involving Iran and related conflicts, have kept Brent crude elevated around $103 per barrel recently, providing a tailwind to the FTSE 100’s heavy energy weighting. Majors like BP and Shell have benefited from the oil surge, offering some offset to broader equity pressures from inflation concerns and softer domestic growth signals.

U.K. economic data continues to weigh on sentiment. The Office for National Statistics reported flat GDP in January, falling short of consensus forecasts for 0.2% growth and raising questions about the recovery pace. This stagnation has complicated the outlook for monetary policy, even as sticky inflation—exacerbated by energy costs—has markets pricing in about an 80% probability of a 25-basis-point rate hike by year-end.

At its March meeting later this week, the BoE is widely anticipated to hold rates steady, with focus shifting to the MPC vote split. Analysts see outcomes like 7-2 or 6-3 in favor of no change as plausible, signaling the committee’s balancing act between supporting growth and guarding against renewed price pressures. Any hawkish tilt could further pressure rate-sensitive sectors.

Sector moves on Friday highlighted the divergent forces at play. Resource and mining names led declines amid profit-taking and broader risk aversion, with Fresnillo down around 5.6%, Antofagasta off 5.5% and Rolls-Royce slipping 5.2%. Other laggards included IMI and Mondi, both down roughly 4.5-4.7%. Housebuilder Berkeley Group fell more than 2% despite reaffirming full-year profit guidance, with executives citing the Middle East situation as a drag on overall market risk appetite.

Defensive plays provided some support, as Hikma Pharmaceuticals rose 2.5%, Imperial Brands gained 2.2% and Bunzl advanced similarly. Energy stocks showed relative strength, underscoring the index’s commodity-linked buffer against pure domestic or growth-oriented weakness.

The FTSE 100’s multinational profile—with substantial overseas revenue—continues to act as a natural hedge in uncertain times. Its dividend yield, hovering near 2.81%, appeals to income seekers amid shifting rate expectations. Compared to global peers facing sharper corrections in tech-driven names, London’s blue-chips have held up better, partly due to energy tailwinds from oil above $100.

Broader market context includes elevated volatility, with the VIX remaining firm and other indices like the S&P 500 and Nasdaq showing weekly declines amid similar inflation and oil dynamics. The FTSE 100’s outperformance relative to some benchmarks highlights its sector composition as a partial inflation hedge.

Looking forward this week, the BoE announcement will dominate, potentially setting the near-term tone for sterling and equities. Any escalation—or signs of de-escalation—in Middle East diplomacy could sway oil prices and, by extension, resource-heavy stocks. Upcoming U.S. data and Fed signals may also influence cross-Atlantic flows.

Technically, support around 10,200 held during Friday’s dip, while resistance lingers near 10,400-10,500. A break higher would require positive catalysts, such as dovish central bank commentary or easing geopolitical headlines.

Despite recent pullbacks, the index’s longer-term trajectory remains upward, having recovered strongly from earlier lows around 7,500 and posting gains of over 20% in the past year in some measures. Investors remain watchful for commodity-driven volatility and policy cues that could dictate the next leg.

As trading resumes Monday, the FTSE 100’s performance reflects ongoing themes: energy resilience amid geopolitical strain, domestic growth softness and central bank caution in a high-inflation environment. For U.K.-focused portfolios, the benchmark’s global tilt offers diversification, though near-term risks from oil-driven inflation and policy uncertainty persist.

Global markets are navigating a phase of heightened uncertainty as rising oil prices and escalating tensions in West Asia begin to ripple through sectors and economies. With crude hovering around the psychologically important $100 mark, investors are becoming increasingly cautious, and market experts believe the environment calls for prudence rather than aggressive buying.

Speaking to ET Now, Chakri Lokapriya, CIO-Equities, LGT Wealth emphasised that the current situation demands restraint from investors even though valuations in several stocks may appear attractive.

“I hope it turns out to be some respite. But clearly the word is caution with oil hovering around $100. At best you can maybe buy a little incrementally but not really go all in,” Chakri Lokapriya said.

Attractive Prices, But Risks Remain

Market corrections in several sectors have created pockets of value, particularly in industrial and auto stocks. However, Lokapriya cautioned that lower prices alone do not necessarily make stocks compelling investments in the current environment.

“It is a very good point; that is the whole issue because you take a company like L&T. Its order book comes from the Middle East but it is an expensive stock. And the same issue applies to auto companies as well where they also export,” he said.
He explained that rising shipping and freight costs, surging oil prices, and a weakening rupee are beginning to weigh on corporate profitability. Over the past year, the Indian currency has depreciated by nearly 8–9%, adding to cost pressures for companies dependent on imports or global supply chains.
“Outside of export, shipping, freight rates, oil prices, and input costs have all gone up very sharply, including the rupee which has fallen about 8–9% over the last year. So the growth estimates at least for the next one year have come down or rather will come down. Against that backdrop, therefore, lower valuations are warranted,” Lokapriya said.
He added that if the geopolitical conflict continues for several months, the market’s upside potential for the remainder of the year could be significantly lower than what investors expected at the beginning of the year.

Oil Shock Ripples Across Sectors
The surge in crude prices has already started affecting multiple sectors that depend directly or indirectly on petrochemical inputs.

“Like you mentioned, it is petchem, agro, all the urea-related sectors, including oil-to-chemicals, tyres, paints, and some of the pipe companies. All these companies are directly or indirectly exposed to various oil and oil derivative products and chemicals and petrochemicals,” he noted.

Input costs in many of these segments have risen sharply within a short span.

“Against this backdrop, everything has gone up 50–60% in just a matter of less than a month and therefore this quarter might be okay because they have already bought it last quarter, but the next quarter the current buying would impact their margins,” Lokapriya said.

Even sectors that are not directly linked to crude oil are likely to face secondary effects.

“For the companies and sectors not directly impacted like banking, there is collateral damage. Lower economic activity translates to lower credit growth. Even consumer staples have a higher input cost and therefore while staples are considered to be low risk, in this environment not,” he explained.

Given these uncertainties, Lokapriya believes investors should remain selective and patient.

“So it is best one generally stays away or incrementally buys into the market.”

Valuations vs Growth Uncertainty
Stocks with strong order books and international exposure have also come under scrutiny as investors assess the potential impact of the conflict.

Taking the example of water treatment company VA Tech Wabag, Lokapriya acknowledged that valuations may appear attractive at current levels but warned that growth projections may still need to adjust.

“Yes, I mean, VA Wabag the valuation is also very attractive at current levels and when we use the word valuations are attractive, it implies that the medium-term growth estimates remain intact which is unlikely the case,” he said.

“Let us assume already a couple of weeks have gone into the war, which means this quarter numbers have come down. That knockdown effect will continue for the rest of this year and therefore the year after.”

He added that markets are still trying to determine the eventual bottom for growth estimates.

Banking Sector Faces Growth Concerns
Private banking stocks have also seen heightened volatility, which Lokapriya attributes largely to fears of slowing economic activity.

“It is expectation of a lower economic activity whether it is restaurants seeing lower business, higher inflation, and in general if the war continues and more importantly the oil continues to remain high, that will translate to inflation,” he said.

While fuel prices at retail pumps have not yet fully reflected the surge in crude prices, the pressure is being absorbed elsewhere in the system.

“Inflation has not yet shown directly at the petrol pump simply because the government is holding prices; it is the refiners who are taking the hit. Now at some point it will start translating even into inflation if oil prices remain high. I think that is the biggest fear,” Lokapriya added.

Airlines Under Pressure
The aviation sector, which is highly sensitive to fuel costs, could also see earnings pressure if crude prices remain elevated.

“Exactly that point which is the inflation in prices; the cost that aviation is facing is not fully passed on yet to the consumer. On the other hand, the consumer is already facing that extra inflation because of the surcharges,” Lokapriya said.

He warned that if airlines fully pass on higher costs to passengers, it could weaken demand and hurt earnings.

“Against this backdrop, earnings for InterGlobe are likely to be cut for the next quarter, not just this quarter.”

When asked whether the stock is a buy at current levels, Lokapriya advised caution.

“No, clearly not because if we know where the oil prices are going to settle at, then yes. If oil prices spike or go down, we do not know. So I would not really buy with 30–40% of the cost being fuel there.”

Incremental Buying the Safer Approach
While investors may be tempted to shift towards domestic sectors perceived as safer, Lokapriya warned that even those segments are not entirely insulated from the broader economic impact.

“You are right and in fact some of the inward sectors whether it is staples or even banks would also face some kind of collateral damage because input costs for staples go up and therefore for banks and financial services generally lower demand,” he said.

Despite the uncertainty, he acknowledged that valuations are slowly becoming more reasonable.

“If we need to buy, the valuations are beginning to look nice. So one can incrementally dip into the market at best but not be aggressive at current levels.”

Shares of Bajel Projects soared as much as 14% to their day’s high of Rs 160 on the BSE on Monday after it secured an ultra mega order worth over Rs 700 crore from Maharashtra State Electricity Transmission Company Limited (MSETCL) for the development of a 400/220 kV Air Insulated Switchgear (AIS) substation at Saswad in Pune district, along with associated transmission lines.

The contract marks the largest single order won by the company in its power transmission business.

The project involves the complete turnkey EPC execution of the 400/220 kV AIS substation at Saswad, Pune. The scope covers design, supply, erection, testing and commissioning of the facility, along with all related transmission lines. It also includes civil works and the full erection, testing and commissioning components required for the project.

At the core of the project is the construction of a greenfield 2×500 MVA, 400/220 kV AIS substation at Saswad. The facility will also include a 1×125 MVAr bus reactor at the 400 kV level. The substation has been planned with provisions for future expansion to support Maharashtra’s long term growth in power demand.

The project will also involve bay additions at three existing and proposed substations to integrate the new Saswad facility with the current transmission network.

In addition, the scope includes building multiple new 400 kV and 220 kV transmission lines, along with LILO (Line In Line Out) arrangements, to connect the Saswad substation to the wider Maharashtra grid.
Located in Pune district, the Saswad substation is expected to become an important node in Maharashtra’s high voltage transmission network. It will help improve power evacuation capacity for the fast growing industrial region around Pune and enhance grid reliability across the state.Commenting on the order win, Rajesh Ganesh, Managing Director and Chief Executive Officer of Bajel Projects Limited, said securing the Rs 700 crore plus ultra mega order from MSETCL marks a key milestone for the company and highlights its EPC capabilities in the high voltage substation segment. He said a 400/220 kV substation of this scale in Pune district will play a vital role in strengthening Maharashtra’s transmission network and meeting the rising power demand from the region’s expanding industrial and urban areas.

Ganesh added that the project supports the company’s RAASTA 2030 strategy of expanding into high value and complex infrastructure projects while also strengthening its partnership with one of India’s key state transmission utilities. He said the company is committed to delivering the project with high standards of quality and safety.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)