Indian Shares Jump At Pre-Open Suggesting Positive Start As Traders Overlook Weak Global Cues Ahead Of Fed

Mumbai, July 29: Indian shares traded higher at pre open signalling a positive start for benchmarks ahead of the US Federal Reserve’s decision on interest rates due later in the day.   

Nifty 50 rose 0.8% and Sensex advanced 0.7% at pre open while Gift Nifty surged 1%. 

Pre open is overlooking weak Asian cues, renewed Middle East hostilities, and rise in oil, choosing to focus instead on expectations that the US central bank may leave rates unchanged.  

Larsen & Toubro, India’s largest construction company, retained its full-year revenue and margin guidance after reporting a rise in first-quarter profit, supported by strong execution across projects and steady order inflows.   

Sugar companies are likely to remain in focus after the government barred dealers from holding sugar inventories for more than 30 days. 

Asian Markets Extend Selloff 

Asian stocks fell on Wednesday, extending a sharp selloff as investors reassessed the sustainability of the AI-driven rally and questioned whether lofty valuations are justified by the sector’s earnings outlook. 

The MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1%, following a 3.6% decline in the previous session, and was on course for a monthly loss of around 8%. Japan’s Nikkei slipped 1% and was headed for a monthly decline of more than 10%. 

South Korea’s KOSPI fell around 5%, reversing earlier gains after plunging more than 10% to a three-month low on Tuesday. The decline came despite strong quarterly earnings from chipmaker SK Hynix, underscoring the growing pressure on technology stocks amid elevated market expectations.

Shares of SK Hynix dropped 9% even after the company reported a more than sixfold increase in quarterly operating profit, as the results fell short of investors’ lofty expectations. 

The weakness in Asian technology stocks could weigh on Indian equities at the open, particularly amid continued caution towards global technology valuations. 

AI Trade Faces Crucial Test From Big Tech Earnings 

Asian chipmakers have been at the centre of this year’s AI-driven rally and, more recently, the sharp debate over whether the boom can continue at its current pace. 

Investors are now awaiting earnings from Microsoft and Meta later on Wednesday for fresh signals on corporate AI spending and whether the enormous capital expenditure by technology companies is generating adequate returns. 

The results follow a cautious reaction to earnings from Alphabet and Tesla last week, with concerns over cash flows adding to questions about whether expectations for AI-related investment and growth have become excessive. 

With the Federal Reserve’s policy meeting taking place alongside a crucial week for U.S. technology earnings, investors appear to be reducing exposure to riskier assets ahead of two major market-moving events. 

Oil Prices Jump As Middle East Conflict Escalates 

The risk-off mood was compounded by a sharp rise in oil prices after fresh attacks in the Middle East ended a period of relative calm in the U.S.-Iran conflict. 

Investors are increasingly focused on the impact of falling supplies on crude prices and the potential knock-on effects for inflation and interest rates globally. 

For India, higher oil prices pose a significant risk as the country depends heavily on imports to meet its crude requirements. A sustained rise in oil could put pressure on the rupee, increase the import bill and complicate the inflation outlook, while also raising costs for oil-sensitive industries. 

The combination of elevated crude prices and weakness in global equities could therefore create a challenging backdrop for Indian markets. 

Global Futures Signal Cautious Sentiment 

U.S. Nasdaq futures were volatile during Asian trading hours and were last down 0.3%, while Euro Stoxx 50 futures also fell 0.3%, pointing to a cautious start for European markets.

However, regional trends remained mixed. Hong Kong’s Hang Seng index gained 1.5%, while China’s blue-chip CSI300 index was broadly flat, highlighting the divergence in sentiment across Asian markets. 

Source

•  Exchanges