Indian Shares Fall At Pre-Open Pointing To a Crash At The Start As Oil Tops $108 Amid Middle East Conflict

Mumbai, September 11: Indian shares fell at pre open signalling a fall at the start for benchmarks as the escalating conflict in the Middle East sent oil racing past $108 per barrel. 

Nifty 50 fell 1% while Sensex declined 0.6% at pre open.  

Indian equities are heading for another difficult week, with the Nifty and Sensex down 1.8% and 2.1%, respectively, putting both benchmarks on course for a fifth consecutive weekly decline. 

The market has also had to absorb a heavy pipeline of new share sales. The planned IPO of the National Stock Exchange, alongside the possibility of a large listing by billionaire Mukesh Ambani’s Jio Platforms, has added to concerns over liquidity as investors assess how much fresh capital the primary market could draw from equities.  

Foreign portfolio investors were net sellers in Indian equities, pulling out ₹438 crore on Thursday, provisional exchange data showed. Their selling tally for September has now climbed to about $1.36 billion, adding to the pressure on domestic benchmarks.  

Information technology shares could remain under pressure after the US proposed scrapping the 60-day window that allows certain H-1B visa holders who lose their jobs to remain in the country while seeking new employment or sponsorship. The move could add to concerns for Indian IT companies with significant US exposure.  

General Insurance Corporation, New India Assurance, IFCI and other companies linked to the National Stock Exchange will be in focus ahead of NSE’s IPO, which is scheduled to open on September 17. The exchange has set a price band of ₹1,700-1,785 per share.  

HDFC Bank could rise after the lender secured favourable orders from Bahrain’s High Civil Court in two cases filed by investors who had bought Additional Tier 1 bonds issued by Credit Suisse. The court examined the claims and evidence before ruling in favour of HDFC Bank, according to media reports. 

Asia slides 

Asian equities came under heavy selling pressure on Friday as a sharp rise in oil prices and higher global bond yields stoked inflation concerns and clouded the outlook for interest rates. The MSCI Asia-Pacific index excluding Japan fell 1.8%, while Japan’s Nikkei tumbled 2.8%. Hong Kong’s Hang Seng declined 1%. 

The sell-off across Asian markets came as Brent crude surged to a four-month high of $109.97 a barrel, gaining 6% overnight. The benchmark was on track for a weekly rise of nearly 13%, as disruptions to oil flows through the Strait of Hormuz and heightened risks around the Red Sea raised fears of tighter global supplies. 

The global backdrop is likely to weigh on Indian equities at the open, with the surge in crude prices particularly negative for oil-importing economies such as India. Higher energy costs could add to inflationary pressures, weigh on the rupee and squeeze corporate margins. Upstream oil producers, however, could remain relatively resilient as elevated crude prices improve their earnings outlook. 

US markets 

Wall Street ended lower on Thursday as investors assessed persistent inflation risks, rising Treasury yields and the surge in crude prices. The S&P 500 fell 0.58%, while the Dow Jones Industrial Average declined 0.60%. The Nasdaq Composite lost 0.65%. 

The selling followed data showing a stronger-than-expected rise in US producer prices for August, reinforcing concerns that inflation could remain sticky. The jump in oil prices added to those worries, while technology stocks bore the brunt of the selling. Nvidia fell 2.3% and Micron dropped 4.7%, with nine of the 11 S&P 500 sectors ending lower. 

Investors are now awaiting the US consumer inflation report, which could influence expectations for the Federal Reserve’s policy decision next week. The data assumes greater importance as higher energy prices threaten to complicate the central bank’s rate-cut outlook. 

Oil, yields keep markets on edge 

Crude remains the biggest source of uncertainty for global markets. Brent touched $109.97 a barrel as disruptions around the Strait of Hormuz kept traders alert to further supply shocks. The prospect of a prolonged conflict has also raised concerns that elevated energy prices could feed into inflation across major economies. 

The rise in oil prices has been accompanied by a sharp increase in bond yields. The US 10-year Treasury yield climbed to 4.97%, approaching the closely watched 5% level, while the 30-year yield touched a 19-year high. Markets were pricing roughly a 70% probability of a Fed rate hike this month. 

Source

• Exchanges