Indian stock market indices Sensex and Nifty and the currency rupee fell sharply today as oil prices skyrocketed after drone attacks on Saudi oil infrastructure. At day's lows, the Sensex fell over 350 points, Nifty slid to 10,968 while the rupee declined to 71.42 a US dollar. However, Sensex and Nifty later pared some losses. Brent crude futures, the international benchmark for oil prices, today rose by as much as 19.5% to $71.95 per barrel, the biggest intra-day jump since the Gulf War in 1991, after an attack on Saudi Arabian oil facilities on Saturday shut about 5% of global supply.

The spike in oil prices overshadowed Indian government's weekend announcement of many measures to boost the housing and export sector.

Some analysts say that the impact on Indian markets could depend on how long oil prices could remain elevated and if there is a flare-up in Middle East geopolitical tensions.

"Investors should remember that these are one-off moves and should not be taken as a trend that will last for months. Further action on crude prices will be a function of how quickly the full capacity is restored and how coordinated the global effort is to release strategic reserves," HDFC Securities said in a note.

Here is what experts say:

Ashish Nanda EVP & Business Head for PCG, at Kotak Securities

"It (Middle East tensions) would certainly impact emerging countries like India in the medium term as uncertainties keep the sentiment volatile. On weekend finance ministry announced several measures to improve real estate sector. However, we feel it would have long-term impacts rather than short term. Two-day Federal Reserve meeting starts on 17th September and the decision on rate cut and the statement from the Fed chief would be most crucial news for global markets. We can expect major volatility in the coming week. In the previous week our broader market did much better as compared to last four weeks. Market breadth improved in terms of turnover and advances to declines ratio. Nifty should remain between the range of 10,950 and 11,250. Focus should be on banks, infra and cement companies."

Sanjiv Bhasin, Executive Vice-President, IIFL Securities

"This fear of rising geopolitical pressure due to spike in oil is a buying opportunity. Markets are over-supplied in oil with price cuts over the last 12 months keeping prices high. However, the risk premium in oil will now get built in the short term. Indian indices are seeing sharp recovery in mid-caps where we feel immense value lies. Hence this will be used as a buying opportunity by both foreigners and domestic investors as the government has its eye on reform and lower cost of money to see pass in effect and spur consumption before the festival season."

Kotak Institutional Equities

"The spike in global crude prices, even though temporary, will be negative for downstream oil marketing companies (BPCL, HPCL and IOCL) and Castrol. We do not rule out a possibility of moderation in marketing margins on auto fuels—a $10/bbl rise in global crude and product prices may require OMCs to increase retail price of diesel and gasoline by 5-6/liter in the following fortnight. Sharp jump in global crude prices may also put pressure on refining margins amid slowing demand, besides increasing absolute quantum of fuel and loss. On the other hand, higher crude prices may be construed positively for upstream PSUs and GAIL."

Arun Kumar, Market Strategist, Reliance Securities

"Indian equities are particularly sensitive to changes in crude prices and US dollar-rupee value. Any selling pressure on Nifty 50 index below 10,950 is likely to lead to panic selling."

HDFC Securities

The Nifty has a strong support at 10890, which will be difficult to break. While the outage may last a couple of weeks, it will be difficult to maintain high crude prices beyond a few days. Investors may use the days ahead to reduce their exposure to upstream oil stocks. Finance Minister Nirmala Sitharaman announced relief measures with a focus on reviving the housing and export sector. Companies in cement, construction contractors, Housing finance, textile and leather sector will benefit."