Markets Open Cautiously Higher as US-China Signal Common Ground on Hormuz

Mumbai, May 13: Domestic equity markets opened on a cautiously positive note on Wednesday, snapping a four-session losing streak that had wiped roughly 4% off the Sensex and Nifty, as a significant diplomatic development offered the first credible ray of geopolitical hope — the US and China have agreed that no country can be allowed to exact shipping tolls in the Strait of Hormuz, signalling rare common ground between the world’s two largest economies on the most disruptive dimension of the Iran war. The development, confirmed by the US State Department, comes ahead of a high-stakes summit between President Donald Trump and Chinese President Xi Jinping later this week.

Sensex & Nifty

The Sensex opened at 74,631.05, up 71.81 points or 0.10%, while the Nifty 50 traded at 23,382.90, barely changed at up 3.35 points or 0.01% at 9:22 am, reflecting a market that welcomed the diplomatic signal but remained unwilling to chase prices aggressively in the absence of a concrete ceasefire breakthrough.

Gainers

Among Nifty 50 gainers in early trade, Asian Paints led with a sharp bounce of 3.31% to ₹2,588.40 from its previous close of ₹2,505.50, followed by Hindalco Industries which rose 1.83% to ₹1,060.50 from ₹1,041.40, Tata Steel which advanced 1.39% to ₹214.95 from ₹212.00, JSW Steel which gained 1.28% to ₹1,268.30 from ₹1,252.30, and Adani Ports which edged up 1.17% to ₹1,708.00 from its previous close of ₹1,688.20.

Laggards

On the losing side, Power Grid Corporation was the steepest decliner, falling 1.31% to ₹302.30 from ₹306.30, followed by Eternal which slipped 1.14% to ₹237.25 from ₹239.98, Bajaj Finance which eased 0.64% to ₹898.45 from ₹904.20, Shriram Finance which fell 0.54% to ₹925.40 from ₹930.45, and Eicher Motors which declined 0.53% to ₹7,088.00 from its previous close of ₹7,126.00.

Broader Markets & Sectoral Indices

In the broader markets, the Nifty Midcap 100 gained 0.71% to 60,129.65 and the Nifty Smallcap 100 advanced 0.79% to 18,080.35, suggesting the relief bounce was more pronounced in the mid and small-cap space than in large-caps. Among sectoral indices, Nifty Metal led gains with a rise of 1.38% to 13,059.75, followed by Nifty Capital Markets up 1.13%, Nifty Core Housing advancing 1.14%, and Nifty Pharma adding 0.63% to 23,990.95, while Nifty Media was the lone sectoral decliner, slipping 0.48% to 1,389.65, and Nifty IT managed a marginal gain of just 0.05% to 28,249.40, reflecting continued caution in the technology space.

Middle East Conflict

The diplomatic breakthrough on the Hormuz tolls issue came after US Secretary of State Marco Rubio and Chinese Foreign Minister Wang Yi discussed the matter in an April phone call, with State Department spokesman Tommy Pigott confirming that both sides agreed no country or organisation can be allowed to charge tolls to pass through international waterways like the Strait of Hormuz. Iran’s near-complete closure of the vital trade artery since the February 28 airstrikes has sent shockwaves through global energy markets, pushing Brent crude above $107 a barrel at its recent peak. The Trump-Xi summit later this week is now being watched closely by markets for any concrete steps that might translate the diplomatic agreement into actual pressure on Tehran to reopen the waterway.

Asian & US Markets

Asian markets were broadly negative in early Wednesday trade, with Hong Kong’s Hang Seng slipping 0.39% to 26,245.77, Indonesia’s JSX Composite falling 0.68% to 6,858.90, and Australia’s ASX All Ordinaries declining 0.28% to 8,884.40, while Japan’s Nikkei 225 bucked the trend with a 0.30% gain to 62,930.20, reflecting the uneven manner in which the US-China Hormuz agreement was being priced across the region. US markets closed mixed on Tuesday, with the Dow Jones Industrial Average edging up 0.11% to 49,760.56 and the NYSE Composite gaining 0.19% to 23,015.34, while the Nasdaq Composite fell 0.71% to 26,088.20 and the S&P 500 slipped 0.16% to 7,400.96.

Oil Prices

Oil prices eased on Wednesday after rising for three consecutive sessions, with Brent crude futures falling 82 cents or 0.76% to $106.95 a barrel and US WTI declining 66 cents or 0.65% to $101.52, as investors paused ahead of developments around the fragile ceasefire and the Trump-Xi summit. The pullback in crude offered some breathing room to Indian policymakers anxiously watching the country’s import bill, though prices remain well above the $100 mark that analysts consider a threshold for sustained macro stress on the Indian economy. Any positive outcome from the summit on the Hormuz issue could deliver a sharper correction in crude prices and provide significant relief to India’s current account and currency.

Retail Inflation

India’s retail inflation edged up to 3.48% in April from 3.40% in March, driven by higher food prices, remaining below the RBI’s 4% target even as the outlook is clouded by rising energy costs tied to the Middle East conflict. Food inflation accelerated to 4.2% in April from 3.87% in March, and with a deficient monsoon season also anticipated, price pressures are expected to build through the coming months.

Tuesday Session

Indian equity markets suffered another brutal session on Tuesday, with the Sensex crashing 1,456.04 points to settle at 74,559.24 and the Nifty falling 436.30 points to close at 23,379.55, as all 50 Nifty constituents barring three ended in the red amid intense selling in IT, realty, consumer durables and financial stocks. Market breadth was deeply negative with 3,219 shares declining against just 875 advances, while the Nifty Smallcap 100 melted over 3% and the Midcap 100 fell 2.5%, eroding nearly ₹12 lakh crore in market capitalisation of BSE-listed companies in a single session. Shriram Finance led Nifty losses with a decline of 4.66%, while TCS, Infosys and HCLTech hit fresh 52-week lows.

Source:

• https://www.nseindia.com/market-data/top-gainers-losers
• https://www.nseindia.com/market-data/live-market-indices
• https://www.bseindia.com/sensex/code/16