Gift Nifty Hints at Muted Start for Sensex, Nifty on Tuesday

Mumbai, Sept 1: Indian equity indices are set to open on a muted note on Tuesday, with Gift Nifty trading slightly lower before the 9.15 am bell. This follows weak global cues ranging from the mixed Asian markets to a broad sell-off on Wall Street, adding to existing caution on Monday’s losses on the Sensex and Nifty benchmarks.  

US President Donald Trump on Monday threatened further military strikes on Iran after the Islamic Republic fired missiles at two bases housing US forces in Jordan in retaliation for an overnight American attack on Iranian targets in the Strait of Hormuz. The weekend flare-up marks the first direct exchange of fire between Iran and the US in over a month and arrives just as markets had begun pricing in lower geopolitical tensions, risking another spike in crude prices amid concern about supplies through the Strait of Hormuz which normally transits a fifth of global oil and gas shipments.  

Oil prices continued to trade higher on Tuesday morning, extending Monday’s jump on the news. As crude benchmarks continue to trade higher after the weekend’s clash, inflation risk will remain firmly in focus for crude-importing nations like India. Coming on top of fragile global risk sentiment and bets continuing to grow for a US Federal Reserve rate hike, traders are likely to see Tuesday’s session extend rather than reverse Monday’s caution.  

Indian traders will watch out for fresh updates from the Middle East region throughout Tuesday’s session, along with cues from the Asian and US markets that preceded India’s open and any additional sanctions announcements from the White House.  

Gift Nifty Charts  

Gift Nifty September contract ended Monday’s session at 24,168.00, down 16.50 points or 0.07 per cent as of 8:09 am IST on Tuesday. The modest loss suggests Indian benchmarks will open either flat or extend Monday’s declines slightly rather than see a sharp move in either direction at the open. As the Nifty contract has not seen any sharp moves so far, traders are likely to see Tuesday’s opening session largely muted until more directional cues from index heavies and fresh news on Middle East trade resumes.  

Iran-US Conflict 

President Trump on Monday warned of unspecified “punishment” for Iran after Tehran fired missiles at two air bases hosting American troops in Jordan in retaliation for US attacks on Iranian military positions on the small island of Larak at the entrance to the Strait of Hormuz. Iran described the attack as a military “skirmish” between the two countries, with Iranian President Masoud Pezeshkian adding that Tehran still supported dialogue with Washington. Trump said Iran’s already weak economy had been further damaged by sanctions while its military “capabilities have never been lower”, ruling out use of nuclear weapons but threatening unspecified “steps” if Iran struck US targets again.  

Asian Markets on Tuesday Morning  

Asian markets traded mixed on Tuesday following the news of further Iran-US hostilities. Japan’s Nikkei 225 index was off 0.14 per cent at 66,311.93 while Hong Kong’s Hang Seng shed 0.07 per cent to 25,566.99. Malaysia’s KLCI dropped 0.91 per cent and Australia’s S&P ASX All Ordinaries fell 0.25 per cent while China’s Shanghai Composite jumped 0.86 per cent and Thailand’s SET advanced 0.44 per cent. Indonesia’s JSX Composite and Pakistan’s KSE 100 edged higher too. With no clear trend across Asian markets, traders may not get a directional cue from their regional peers ahead of Tuesday’s open on Indian exchanges.  

US Markets  

Wall Street ended broadly lower on Monday as benchmarks tracked their decline on Monday. The Dow Jones Industrial Average settled down 0.70 per cent at 53,185.90 while the S&P 500 eased 0.33 per cent to 7,686.14. The Nasdaq Composite fell a more muted 0.12 per cent to 26,370.89, as was the NYSE Composite which dropped 0.50 per cent. Canada’s S&P/TSX Composite index also lost 0.78 per cent. The broad-based move across Wall Street indexes reflected caution surrounding US-Iran tensions and an upward rate hike bias continuing to grow among investors following comments from Fed Governor Kevin Warsh on Monday.  

Oil Prices  

Oil prices extended gains on Tuesday morning after rallying on Monday following Iran and US tensions escalating over the weekend. West Texas Intermediate crude traded up 1.11 per cent at $86.71 a barrel while Brent crude was at $91.24, higher by 0.83 per cent. Murban crude climbed 2.82 per cent to $98.45 on concerns over Gulf-related crude supply routes closest to the Strait of Hormuz narrowing again amid heightened geopolitical tensions. The rising crude prices following last weekend’s flare-up and Trump’s comments about possible further attacks keeps inflation risk at the forefront of traders minds in crude importing nations such as India.  

Sensex and Nifty Levels on Monday  

Indian equity benchmarks ended in the red on Monday after the closing auction phase, with the Sensex down 307.24 points or 0.40 per cent at 76,957.27 and Nifty ending 95.25 points or 0.39 per cent lower at 24,080.40. The decline came as crude prices jumped, Iran-US tensions returned and bets grew for a US rate hike continued to weigh on investor sentiment, even as private bank stocks bucked the broader downtrend. Heading into Tuesday’s session, these same global factors may continue to weigh on India’s equity benchmarks if Gift Nifty holds near current levels.  

Source

• nseindia. com
• Reuters
• OilPrice.com  
• https://www.reuters.com/world/middle-east/trump-posts-ai-video-irans-kharg-smithereens-no-evidence-attack-20-26-08-31/
• https://www.reuters.com/markets/stocks/asia-pacific/
• https://oilprice.com/oil-price-charts/