Gift Nifty Points to Muted Opening as Iran War Escalates, Fed Lifts Rates

Mumbai, Sept 17: Indian markets are likely to open muted on Thursday as investors weigh further escalation in the Iran conflict with the US raising interest rates. Saudi Arabia and Yemen’s Houthis traded new attacks overnight as the Fed increased rates by 25 bps and signalled more ahead. Asian markets are currently mixed and Wall Street ended lower, setting little directional cues for Indian equity benchmarks.  

Domestic markets have little reason for cheer either. Indian indices snapped two days of losses on Wednesday but with banks and FMCG driving the gains and participation remaining subdued. The failure of crude to give up a few more bucks combined with the Fed’s unexpected hawkishness has set the stage for another directionless session through Thursday.  

US central bank lifted its benchmark interest rate by a quarter percentage point to a range between 3.75 per cent and 4.00 per cent on Wednesday. Fed chair Kevin Warsh voted for the first time since taking office this month and signed on to the unanimous rate hike decision. “Sixteen of eighteen policymakers projected at least one more increase in the target rate by the end of 2022,” said Fed officials on Wednesday. That’s a complete reversal from markets pricing in rate cuts just months ago. Investors reacted sharply to the Fed’s pivot on Wednesday with treasury yields spiking and the US Dollar gaining across the board.  

Gift Nifty 

Gift Nifty futures for the September 29 series were trading at 23,222.50 as of 8: 10 am IST on Thursday, up 82.50 points or 0.36 per cent. The July futures contract had gained nearly 200 points during the evening session before profit booking trimmed some gains near the bell. Nifty futures trading at a slight premium to the Nifty 50 close of 23,217.60 on Wednesday points to a flat to mildly positive opening on Dalal Street. However, traders seem to be exercising caution rather than betting with conviction just yet as they digest the fallout from higher crude prices and the Fed’s hawkish pivot.  

Oil Prices 

Oil prices ticked down on Thursday despite ongoing tensions in the Middle East. Brent crude eased 0.19 per cent to trade at $105.63 per barrel while WTI crude slid 0.28 per cent to $102.14 a barrel. Murban crude was trading almost flat at $123.81 a barrel, up 0.04 per cent on the day while the OPEC Basket added 1.23 per cent to $124.63 a barrel. The Indian Basket, which has more bearing on India’s import bill and rupee rose 1.93 per cent to $131.19 per barrel. Despite Wednesday’s mild pullback crude prices remain well up from levels seen before Saudi Arabia announced intensified attacks on Houthis last weekend.  

Iran War 

Saudi Arabia launched dozens of air strikes on Yemen on Wednesday, targeting Houthi military positions as many as 450 times since Sunday. In response, Houthi fighters carried out drone and missile attacks on Saudi Arabia’s Red Sea oil port of Yanbu and on a military airbase in southern Saudi Arabia overnight. The Iran-backed rebel group also claimed responsibility for shooting down a Saudi F-15 warplane flying near Yemen’s border, providing no evidence. US citizens have been told to avoid all travel within 20 miles of Yemen’s border with Saudi Arabia after the State Department issued an update to an existing travel advisory Wednesday. Commercial and oil facilities along the Red Sea coast represent the newest theatre of war as the conflict deepens, raising fresh concerns about energy infrastructure and shipping.  

Asian Markets on Thursday Morning 

Asian markets opened mixed on Thursday. Australia’s All Ordinaries rose 0.38 per cent while Indonesia’s Jakarta Composite gained 0.53 per cent. Japan’s Nikkei 225 edged higher by 0.07 per cent. Hong Kong’s Hang Seng declined 1.05 per cent while Pakistan’s KSE 100 lost 0.81 per cent. China’s Shanghai Composite slipped 0.44 per cent and Thailand’s SET slumped 1.01 per cent. Traders in Asia were left with little cues from Wall Street overnight while digested Wednesday’s Fed hike and further surprises about future policy tightening.  

US Markets on Wednesday 

US equity markets closed lower on Wednesday led by the Dow Jones Industrial Average. The Dow fell 1.21 per cent to settle at 51,461.90, the S&P 500 dropped 0.45 per cent to close at 7,551.81 and the Nasdaq Composite slipped 0.01 per cent to 25,978.42. The NYSE Composite also ended lower on Wednesday down 0.81 per cent at 23,934.14.  

Indian Markets on Wednesday 

The Sensex rose 332.63 points or 0.45 per cent to 74,336.45 while the Nifty ended 99 points or 0.43 per cent higher at 23,217.60 on Wednesday. Ending two straight days of declines, the benchmark indices were led by banks, financials and FMCGs. SBI Life, HDFC Life, ITC, Axis Bank and State Bank of India were top gainers on the Sensex. IT and pharma were the only losers among sectoral indices as TCS, Wipro, Infosys and Tech Mahindra fell on worries about higher US rates denting tech exports. Only 1,913 stocks advanced compared to 2,241 decliners on the BSE suggesting weak breadth behind Wednesday’s rebound.  

Source

•  nseindia.com
• https://www.reuters.com/world/iran/
• https://www.reuters.com/business/warshs-words-may-matter-more-than-anticipated-fed-rate-hike-2026-09-16/
• https://www.reuters.com/markets/asia/