Pre-Open Points To Flat Start As Retail Inflation Subdues Sentiment

Mumbai, October 13: Indian shares flatlined at pre open pointing to a muted start as retail inflation data released yesterday heightened the risk of rate hikes.

India’s retail inflation climbed to 5.54% in September, surpassing expectations and moving closer to the Reserve Bank of India’s 6% upper tolerance limit. The acceleration in prices, amid the Iran war and a weak monsoon, has heightened concerns over the inflation outlook and strengthened the case for further monetary tightening.  

Separately, the RBI tightened norms governing rupee non-deliverable derivative contracts, extending the 20% cash reserve requirement to banks’ own rupee currency hedges. The measure forms part of a broader series of steps unveiled since Saturday to stem the rupee’s slide, driven by elevated crude oil prices and persistent capital outflows.  

Foreign portfolio investors (FPIs) extended their selling streak to 12 consecutive sessions on Monday, net offloading Indian equities worth Rs 1,708 crore. Their net outflows have reached $4.9 billion in October, putting the month on track for the heaviest foreign equity sell-off since June.  

HCLTech reported a 21.2% year-on-year increase in second-quarter net profit, beating market expectations, but struck a cautious note on full-year revenue growth amid geopolitical uncertainties and concerns over AI-driven disruption.  

ICICI Prudential Asset Management Company recorded revenue growth of more than 16% in the July-September quarter, while net profit rose 6.1%.  

RBL Bank’s quarterly profit nearly tripled. 

Asia Markets Melt Down 

Asian equities plunged on Tuesday, with MSCI’s broadest index of Asia-Pacific shares outside Japan falling 2.8% in early trade. South Korea’s Kospi tumbled 7%, while Japan’s Nikkei 225 declined 2.5% after returning from a holiday. Technology stocks led the rout as weakness in US semiconductor shares spilled over into regional markets, with investors reassessing elevated valuations amid intensifying US-China competition in artificial intelligence. 

The sell-off across Asian markets, coupled with crude oil holding above $105 a barrel, threatens to weigh on domestic equities at the opening bell. India, a major oil importer, remains particularly vulnerable to elevated energy prices, which can widen the import bill, pressure the rupee, fuel inflation and squeeze corporate margins. 

The extent of the decline in Indian markets will also depend on domestic institutional investor activity and stock-specific developments, even as the global backdrop points to a risk-off start. 

US Markets Mixed As Technology Stocks Weaken 

On Wall Street, US equities ended mixed on Monday as losses in technology stocks offset gains elsewhere. The Nasdaq Composite fell 0.4%, dragged down by semiconductor shares, while the S&P 500 and Dow Jones Industrial Average saw divergent moves. US stock futures were largely muted ahead of the opening bell as investors weighed elevated energy prices against expectations of strong corporate earnings. 

Market participants are turning their attention to quarterly results from major US banks, including JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo. Their earnings are expected to provide insights into consumer spending, lending growth, dealmaking activity and the impact of borrowing costs on financial performance. 

Inflation data due later this week will also be closely watched for clues about the Federal Reserve’s interest-rate trajectory, adding to investor caution. 

Crude Oil Above $105 Fuels Inflation Concerns 

Brent crude futures stood at $105.3 a barrel as renewed Middle East tensions heightened concerns about potential disruptions to global energy supplies. Attacks on Saudi Arabia and uncertainty surrounding a fragile Russia-Ukraine energy truce have kept oil markets on edge, despite the prospect of additional Russian diesel supplies. 

Elevated crude prices remain a key headwind for Indian equities, particularly oil-sensitive sectors such as aviation, paints and tyres, where higher input costs can erode margins. 

Source

•  Exchanges