Pre-Open Points To Lower Start As Oil Continues Climb

Mumbai, September 29: Indian shares edged down at pre open signalling a lower start for benchmarks as global equities declined amid a continued climb in crude prices on lack of diplomatic progress in Middle East. 

Nifty 50 declined 0.2% while Sensex fell the same at pre open. 

Both benchmarks crashed to end near six month lows in the previous session.  

Foreign institutional investors (FIIs) stepped up selling in Indian equities on Monday, offloading shares worth Rs 5,353 crore, their highest outflow in four weeks, according to provisional exchange data. Domestic institutional investors (DIIs), however, bought equities worth Rs 5,189 crore during the session.  

Among individual stocks, Adani Group companies are likely to remain in focus after the Securities and Exchange Board of India (SEBI) disposed of proceedings against chairman Gautam Adani and four group companies in a matter concerning alleged violations of public-shareholding requirements.  

The case examined whether the companies complied with the 25% minimum public shareholding requirement and adequately disclosed holdings linked to promoters. SEBI imposed penalties of Rs 20 lakh each on two individuals over wrongful disclosures.  

Tata Group companies could also attract attention after Tata Trusts proposed merging two group entities with Tata Sons, a move aimed at preventing the holding company from being pushed towards a listing under Reserve Bank of India regulations.  

Coforge, an IT services provider, named Akhil Gupta as chairman and non-executive independent director for a five-year term, following OP Bhatt’s resignation from the chair.  

Pidilite Industries has teamed up with South Korea’s Hwaseung Chemical to bring advanced adhesive technology for footwear manufacturing to the Indian market.  

Vikram Solar, a solar module manufacturer, has won a 400 MW supply contract in Maharashtra.  

NCC, an infrastructure company, received an order worth Rs 1,077 crore. 

Asian markets under pressure 

Asian equities traded mostly lower on Tuesday as rising oil prices and higher US Treasury yields weighed on sentiment. Japan’s Nikkei fell 0.9%, South Korea’s Kospi declined 0.5% and the MSCI AC Asia Pacific ex-Japan index slipped 0.3%. China’s blue-chip CSI 300 index edged down 0.08% as investors also assessed fresh uncertainty around US restrictions on Chinese components used in data centres. 

The weakness across Asia followed a lower close on Wall Street, where investors remained concerned that higher crude prices could fuel inflation and complicate the outlook for US interest rates. 

Wall Street ends lower 

US stocks declined on Monday after President Donald Trump rejected an Iranian peace proposal, raising uncertainty over the prospects of a near-term de-escalation of the conflict. The Nasdaq fell 0.9%, while the broader market remained under pressure from concerns over higher energy costs and tighter financial conditions. 

US Treasury yields also climbed sharply. The 10-year yield moved above 5.27%, its highest level in 19 years, while the two-year yield approached 5%. Higher yields can weigh on emerging-market assets by making US fixed-income investments relatively more attractive. 

Nvidia bucked the broader trend and gained after announcing a $150 billion increase in its share buyback authorisation. 

Oil prices remain key risk 

Crude oil remained the biggest concern for global markets, with Brent trading around $106.60 a barrel in Asian trade after rising above $108 on Monday. Prices jumped after Trump’s rejection of the Iranian proposal, keeping the geopolitical risk premium in crude elevated. 

For India, higher crude prices pose a particular risk as the country imports a large share of its oil requirements. A sustained rise in energy costs can put pressure on the trade balance, inflation, the rupee and corporate margins. 

The pressure on Indian refiners could also intensify as Russian crude supplies to India are expected to tighten in October and November amid stronger Chinese demand and disruptions to Russian exports. Indian refiners may therefore need to source more expensive barrels from the Middle East and West Africa. 

Source

• Exchanges