Markets Set to Open Marginally Lower on Thursday

Mumbai, May 14: Domestic stocks are expected to open flat-to-down Thursday as the fleeting respite seen in markets following Wednesday’s four-session losing streak ran into selling pressure as analysts dialled down expectations from Thursday’s Trump-Xi meet with China unlikely to give US a clear win in its push to force Iran to open the Strait of Hormuz. 

Gift Nifty futures was trading at 23,532.50 at 7: 51 am on May 14 down by 46.50 points or 0.20% indicating a weak open for Indian indices Thursday following a narrow recovery on Wednesday. 

Iran War Conflict 

Investors fear the Iran war may drag on as the US and Iran emerge with nothing from the high-level secret meetings this week given that the two sides are nowhere close to each others demands including a US lift of its naval blockade around Iran, Iran’s resumption of oil exports and control over Strait of Hormuz. Iran has shut down nearly 100% of Strait of Hormuz flow since Israeli-US missiles attacks on tankers in Hormuz on Feb. 28 maintaining fifth of world’s oil and gas supply at hostage helping Brent crude trade well over $100 per barrel. Trump aides see Beijing — the biggest buyer of Iranian oil — as one of the few players capable of persuading Tehran to finalise a deal, but analysts at the Council for Strategic and International Relations warn that Xi is approaching the summit from a position of soaring confidence and is unlikely to use China’s considerable sway with Iran to push it toward major concessions.  

Asian stocks 

Asian stocks traded mixed Thursday morning with Japanese Nikkei 225 up 0.28% at 63,448.87 and Hong Kong’s Hang Seng Index adding 0.62% to 26,551.46 building on optimism from Wednesday. Indonesia’s JSX Composite slumped 1.98% to 6,723.32, Pakistan’s KSE 100 declined 0.87% to 167,451.14, Malaysian FTSE Bursa KL Compound slipped 0.28% to 1,745.67, Shanghai’s Composite shed 0.66% to 4,214.76 and Australia ASX All Ordinaries eased 0.13% to 8,868.80, underscoring Asia market’s sense of disappointment about Trump-Xi meeting this week. Nasdaq Futures was down marginally by 0.05% to 28,475.00 hinting at potential weak open for US tech stocks on Thursday. 

US stocks 

US markets finished mixed Wednesday with Nasdaq Composite jumping 1.20% to 26,402.34 and S&P 500 up 0.58% to 7,444.25 on strong technology stocks covering some of Tuesday’s steep losses while Dow Jones Industrial Average declined 0.14% to 49,693.20 and NYSE Composite dipped 0.18% to 22,973.55. Futures were flat to mixed in Asian trade, as investors remained focused on US-China relations and any major developments out of US Federal Reserve Chair Jerome Powell’s congressional testimony scheduled for later in the day. Markets also remained cautious about possible interest rate hikes by Fed after Consumer Price Index on Tuesday came in hotter-than-expected reading raising doubts about Powell’s dovish stance. 

Oil prices bounce back slightly 

Oil prices ticked higher early Thursday with Brent crude futures adding 13 cents or 0.12% to $105.76 per barrel and US West Texas Intermediate rising 12 cents or 0.12% to $101.14 a barrel after falling Wednesday with Brent declining by more than $2 per barrel and WTI dipping by more than $1 amid concerns about possible US interest rate hikes after Consumer Price Index crossed Fed’s 2% inflation target raising questions on Fed chief Jerome Powell’s dovish stance reiterated in his semi-annual monetary policy report to Congress on Tuesday. Both oil benchmarks will react sharply to any news related to Trump-Xi meet and Iran conflict Thursday. 

Closing on Wednesday
Indian markets snapped their four-day losing streak on Wednesday, with the Sensex rising 49.70 points to settle at 74,608.98 and the Nifty climbing 33 points to close at 23,413, as metal, oil-linked, and consumer stocks came to the rescue even as gains were capped by declines in IT, auto, and banking shares. The metal index surged more than 3%, with oil and gas, infrastructure, and consumer durables also posting gains, while the IT index fell 1.13% and the auto index skidded nearly 1%, keeping the overall recovery narrow and tentative. Market breadth was positive with 2,328 stocks advancing against 1,690 declines, and the Nifty Midcap 100 outperformed with a 0.8% gain, though India VIX edged up 0.73% to 19.42, signalling that caution rather than confidence underpinned the day’s modest recovery. 

Source: nseindia.com