Nifty Flatlines, Sensex Climbs At Pre-Open Pointing To Mixed Start

Mumbai, September 8: Indian shares diverged at pre open pointing to a mixed start for benchmarks as oil climbed and Asia traded lower. 

Nifty 50 declined 0.03% and Sensex rose 0.2% at pre open.  

Investors will turn their attention to Tata Consultancy Services (TCS) as India’s largest software exporter kicks off the September-quarter earnings season for major companies. The results will be closely watched for indications on demand trends, deal activity and the outlook for the IT sector. 

The Reserve Bank of India raised its benchmark repo rate by 25 basis points to 5.5% on Wednesday, its first rate hike in nearly four years, as policymakers grappled with rising inflation even as economic growth remained robust. 

The RBI also shifted its policy stance from “neutral” to “calibrated tightening”, signalling that further rate increases could be on the table as higher oil prices linked to the Iran conflict threaten to stoke inflation, squeeze household purchasing power and put pressure on emerging-market currencies. 

The rate hike came against the backdrop of persistent foreign investor selling. Foreign investors sold Indian equities worth Rs 6,121 crore ($632.60 million) on Wednesday, extending their selling streak to nine consecutive sessions, provisional exchange data showed.  

Jubilant FoodWorks reported an 11.9% year-on-year increase in consolidated revenue for the second quarter, supported by healthy sales at its Domino’s pizza outlets.  

Sun Pharmaceuticals will be in focus after announcing that its board will meet on October 12 to consider raising up to Rs 15,000 crore through non-convertible debentures. 

Asian Markets Trade Lower 

Asian equities traded mostly lower in early trade, with Japan’s Nikkei 225 and South Korea’s Kospi each falling 0.9%. MSCI’s broadest index of Asia-Pacific shares outside Japan was also down 0.7%. 

Sentiment remained cautious as higher borrowing costs and rising oil prices raised concerns over persistent inflation and the scope for central banks to ease monetary policy. 

The pressure on bond markets was compounded by reports that artificial intelligence companies are looking to raise billions of dollars through debt, adding to concerns about increased borrowing and investment. 

US Markets End Lower 

Wall Street ended lower on Wednesday, with the S&P 500 and Dow Jones snapping four-session winning streaks, while the Nasdaq Composite declined for the first time in six sessions. 

The S&P 500 fell 0.22%, while the Dow Jones Industrial Average declined 0.66% and the Nasdaq Composite lost 0.22%. Dow Jones futures were down 0.12% in Asian trading on Thursday. 

Investors remained focused on US Treasury yields after the 10-year yield climbed to 5.326%, its highest level in 24 years, before easing to around 5.298%. 

Fed Minutes Keep Rate Outlook In Focus 

The rise in yields followed the release of minutes from the Federal Reserve’s September meeting, which showed that most policymakers still saw scope for another rate hike before the end of the year. 

The minutes reinforced concerns that US interest rates could remain higher for longer, particularly if inflation proves sticky. A higher-for-longer rate environment could also keep foreign investors cautious towards emerging markets such as India. 

Oil Rebounds Above $100 

Crude oil prices added to the pressure on global equities. Brent crude futures rose 2% to $102.3 a barrel, while US West Texas Intermediate crude gained 1.8% to $89.9 a barrel. 

Brent’s return above the $100-a-barrel mark is a concern for India, which relies heavily on imported crude. Higher oil prices can widen the country’s import bill, pressure the rupee, squeeze corporate margins and complicate the inflation outlook. 

Source

•  Exchanges