Global investors may be underpricing the impact of a conflict between Israel and Iran, market watchers warned on Monday, as stocks rallied despite escalating warfare in the Middle East. The two regional powers continued trading fire on Monday, marking the fourth consecutive day of fighting since Israel launched airstrikes against Iran last week.

Indian stock markets opened on a flat note in green on Monday, reflecting cautious investor sentiment amid ongoing tensions between Iran and Israel.

Relative calm returned to global markets, with stocks climbing and oil sinking alongside gold as fears subsided that Israel’s war against Iran would escalate into a wider conflict. Equities extended gains on news reports Iran is signaling it wants to restart talks over nuclear programs.

Paint manufacturers such as Asian Paints, Berger Paints, and Kansai Nerolac source around 50% of their raw materials from crude-based derivatives like resins and solvents. These input costs are highly sensitive to crude fluctuations.

The ripple effect of the back-to-back strikes between Israel and Iran were seen in the U.S. stock market on Friday. CBS News MoneyWatch correspondent Kelly O'Grady has more.

Indian benchmark indices edged higher on Monday, rebounding after two straight sessions of losses, despite lingering concerns over rising geopolitical tensions between Israel and Iran that continued to impact global market sentiment.

U.S. stocks were sharply down Friday, after Israel launched strikes on Iran's nuclear sites. But major benchmarks were off their morning lows.

The Indian rupee opened significantly weaker on Friday, plunging by 55 paise to 86.1537 against the US dollar, breaching the crucial 86-mark for the first time in recent sessions. The sharp decline was directly linked to escalating geopolitical tensions and a surge in global oil prices.