Asian Markets Advance, Oil Eases; Global Cues Point To Positive Start For Sensex, Nifty

Mumbai, July 21: Indian benchmark indices are likely to open on a positive note on Tuesday, taking cues from a firm trend across Asian equities as easing oil prices and hopes of progress on Middle East diplomacy helped improve risk appetite. However, persistent geopolitical uncertainty, elevated crude prices and caution ahead of a heavy slate of US technology earnings could keep gains in domestic equities measured.

Asia advances

Asian stocks advanced on Tuesday after mediation efforts in the Middle East pushed oil prices lower, easing some concerns over the impact of the conflict on global inflation and economic growth. The MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.25%, while Japan’s Nikkei rose 1.7%. South Korea’s Kospi rose 3.3%. Lower crude prices provided some relief to oil-importing economies, although investors remained alert to developments in the Middle East and the possibility of renewed volatility in energy markets.

The softer oil backdrop is a positive for India, which imports a large proportion of its crude oil requirements. A sustained moderation in crude prices could ease pressure on the country’s trade deficit, inflation and the rupee, while also benefiting sectors such as paints, aviation, chemicals and logistics. Conversely, any fresh escalation in geopolitical tensions that pushes oil sharply higher could weigh on Indian equities and revive concerns around inflation and corporate margins.

US Markets

Wall Street ended lower on Monday as investors balanced geopolitical uncertainty with anticipation around a busy week of corporate earnings, particularly from major technology companies. The focus is now shifting towards results from megacap technology and semiconductor companies, with investors looking for evidence that the massive rally in artificial intelligence-linked stocks can be justified by earnings and future growth prospects. Dow was down 0.59%, S&P 500 0.19%, and Nasdaq 0.05%.

The earnings season is emerging as a key driver for global markets. Strong results and upbeat guidance from major technology companies could revive risk appetite, while disappointing numbers or cautious outlooks could trigger further profit-taking in richly valued technology and AI stocks.

European Markets

European equities closed slightly lower on Monday as investors remained cautious amid Middle East tensions and higher oil prices, while also positioning themselves ahead of upcoming technology earnings and the European Central Bank’s policy meeting. The STOXX 600 fell 0.3%, with travel and leisure stocks among the biggest decliners, while energy shares gained as crude prices remained elevated.

European investors are also weighing the potential economic impact of higher energy costs. Any prolonged disruption to oil supplies could add to inflationary pressures and complicate the outlook for interest rates, even as markets assess the potential for monetary policy easing or tightening later in the year.

India Outlook

Against this backdrop, Indian markets are likely to see a positive opening, with the early trend supported by gains in Asian equities and softer crude prices.

However, investors are likely to remain selective, with geopolitical developments, crude oil movements and the earnings season continuing to dictate sentiment.

Overall, the global setup appears supportive for the Sensex and Nifty at the open, although the absence of a strong lead from Wall Street and lingering Middle East uncertainty could limit the upside. Market participants are likely to track developments in oil prices, the rupee’s movement against the dollar and stock-specific earnings triggers for further direction during the session.

Source:

• exchanges