Nifty Flatlines, Sensex Declines At Pre-Open Signalling Mixed Start For Benchmarks

Mumbai: Indian shares were subdued at pre open signalling a flat-to-lower start for benchmarks amid elevated crude prices due to the ongoing conflict in the Middle East. 

Nifty 50 flatlined and Sensex declined 0.24% at pre open.  

Indian equities have remained under pressure in recent weeks, with the Nifty 50 and Sensex down 2.7% and 2.5%, respectively, over the past four weeks. Elevated crude prices and rising global bond yields have weighed on risk appetite. 

Market participants will also assess the impact of revised rules governing the pre-open session, which align the process more closely with the recently introduced closing auction session (CAS). The new mechanism has contributed to heightened volatility in the final minutes of trading.  

Foreign investors offloaded Indian equities worth Rs 3,112 crore ($329.38 million), according to provisional exchange data. Their net outflows from Indian stocks have reached $782 million so far in September. 

Tata Consultancy Services said its arm, along with partners, plans to commit as much as Rs 70,000 crore ($7.41 billion) towards developing a 1-gigawatt AI data-centre campus in Telangana.  

Cohance Lifesciences said the U.S. FDA has completed its inspection of the company’s Telangana manufacturing facility, issuing a Form 483 with four observations. 

Asia rises 

Asian markets traded firmly higher in early deals, with Japan’s Nikkei rising more than 2% and South Korea’s Kospi gaining around 3%. MSCI’s broadest index of Asia-Pacific shares outside Japan was up about 0.9%, as investors took comfort from stronger-than-expected U.S. jobs data and signs of resilience in the global economy. 

The positive Asian cues are likely to support Indian equities at the open, following the recent weakness in domestic benchmarks. However, the rally may remain measured as investors weigh rising energy prices, geopolitical risks and the possibility of tighter monetary policy in major economies. 

Oil prices remain key risk 

Crude oil prices remained elevated, with Brent futures near $96.80 a barrel and U.S. West Texas Intermediate crude around $92. Brent gained 7.8% last week, while WTI advanced nearly 10%, after escalating military tensions between the U.S. and Iran raised concerns over prolonged disruptions to crude supplies through the Strait of Hormuz. 

For India, higher crude prices remain a major concern given the country’s heavy dependence on oil imports. A sustained rise in energy costs could put pressure on the rupee, increase the import bill and add to inflationary pressures, while also raising costs for oil-sensitive sectors. 

US rate outlook clouds sentiment 

The stronger-than-expected U.S. jobs report has also complicated the global rate outlook. U.S. employers added 162,000 jobs in the latest report, strengthening expectations that the Federal Reserve could raise interest rates at its September 15-16 meeting. Markets are pricing in roughly a 57% probability of a September rate hike. 

Higher U.S. rates and bond yields could weigh on emerging-market assets, including Indian equities, by making dollar-denominated assets more attractive and potentially limiting foreign portfolio inflows. 

In Europe, investors are also positioning for the European Central Bank’s policy decision this week, with markets increasingly expecting a rate hike to 2.75% and another increase to 3% seen possible by December. 

Source

•  Exchanges