Pre-Open Points To Lower Open As MSCI Rejig Looms, Oil Jumps

Mumbai, August 31: Indian shares edged down at pre open signalling a lower start for benchmarks as the first MSCI rebalancing under the new closing auction system loomed and oil jumped after tensions escalated in the Middle East. 

Nifty 50 declined 0.2% and Sensex declined 0.12% at pre open.  

Axiscades Technologies, an engineering firm, plans to take a controlling stake in Bengaluru-based Cloud Wave Technologies, valuing the target at an enterprise value of Rs 260 crore. Clean Max Enviro Energy Solutions, a renewable energy company, has entered into a term-sheet agreement with Envision Energy India to source 1,550 MW of wind turbine generators. 

Asian Markets Slide 

Asian equities fell sharply on Monday, with Japan’s Nikkei down 1.6% and South Korea’s Kospi losing 2%. MSCI’s broadest index of Asia-Pacific shares outside Japan also traded lower. 

The selloff reflected growing investor concerns that an escalation in the Middle East could disrupt oil supplies and global trade, while adding to inflationary pressures. 

The weakness in regional markets is likely to weigh on Indian equities at the open, with investors turning cautious after the latest escalation in geopolitical tensions. 

Oil Prices Jump Over 2% 

Oil prices were the biggest market trigger after crude jumped more than 2% following the U.S. strike on Iran’s Larak Island. 

Brent crude moved towards $90 a barrel, while U.S. West Texas Intermediate also gained, as markets assessed the risk of disruptions to oil shipments through the Strait of Hormuz. 

Higher crude prices are a key negative for India, which relies heavily on imports to meet its oil demand. A sustained rally in crude could widen the country’s import bill, put pressure on the rupee and complicate the inflation outlook. 

Oil-sensitive sectors are therefore likely to remain in focus. Upstream producers such as ONGC and Oil India could benefit from higher crude prices, while airlines, paints, chemicals and other fuel-intensive industries could face margin pressure if prices remain elevated. 

US, European Futures Point Lower 

The cautious mood extended to global equity futures. S&P 500 futures fell 0.4%, while Nasdaq futures were down 0.5%, signalling a weaker start on Wall Street after U.S. stocks ended the previous week under pressure. 

European futures were also lower, with EUROSTOXX 50 futures down 0.5% and DAX futures losing 0.4%. 

Investors are also reassessing the outlook for U.S. interest rates after recent comments from Federal Reserve officials strengthened expectations that monetary policy could remain restrictive. 

Higher U.S. Treasury yields and a firmer dollar could further weigh on emerging-market assets, including Indian equities, by making dollar-denominated investments more attractive. 

Source

•  Exchanges