Hopes of a strong rebound in Indian stock markets are likely to be nullified after US President Barack Obama clinched the backing of two key figures in Congress in his drive for limited U.S. strikes on Syria. Asian stocks also faltered on Wednesday, while oil and gold held on to overnight gained after the latest developments in the US.

Fears of military tensions in the Middle East will continue to roil stock markets in the short term, analysts said. The BSE Sensex had crashed 651 points or nearly 4 per cent on Tuesday on these fears.

The broader Nifty may see a small rebound according to futures trade on the Singapore Exchange. As of 08.20 a.m., the SGX Nifty traded 16 points or 0.30 per cent higher at 5,337. Spot Nifty ended at 5,341 on Tuesday.

The rupee is also likely to start lower as the dollar rose to a six-week peak against a basket of major currencies. The rupee plunged 2.5 per cent yesterday to close at 67.63. Traders said the renewed weakness in the rupee is a major concern for stock markets.

The Street has now pinned its hopes on Raghuram Rajan, who takes over as the governor of India’s central bank today, to come up with a strong strategy to defend the rupee.

The government’s finances have come under stress amid rising crude prices increasing worries that fiscal deficit may overshoot.

“As fiscal deficit concerns weigh, the market may remain rangebound for remaining part of 2013. Valuations are still high in the context of economic slowdown and rupee movements,” said Dinesh Thakkar, chairman and managing director at Angel Broking.

(With inputs from Reuters)