Pre-Open Points To Lower Start As Oil, Iran Weigh On Sentiment

Mumbai, July 22: Indian shares declined at pre open signalling a lower start for benchmarks as oil prices continued to climb amid rising hostilities in the Middle East. 

Nifty 50 declined 0.1% and Sensex went down 0.11% at pre open while Gift Nifty declined 0.4%. 

Earnings will remain a key market trigger, with Dr Reddy’s Laboratories, Eternal and Nestle India scheduled to announce their quarterly results.  

Spotlight will also fall on Bandhan Bank which reported growth in first-quarter interest income and profit after tax, while asset quality also improved during the period.  

MedPlus Health Services posted a 22% year-on-year decline in quarterly net profit as intensifying competition and higher expenses linked to an aggressive store expansion programme weighed on earnings.  

IndiaMART InterMESH reported an increase in revenue from operations and net profit for the April-June quarter. 

Asia Rises 

The MSCI Asia-Pacific index excluding Japan gained 1.2%, while South Korea’s Kospi surged more than 5% and Japan’s Nikkei 225 advanced 1.9%. Technology stocks led the gains after robust semiconductor export data from South Korea and upbeat trade figures from Taiwan strengthened optimism over the global chip cycle. 

The rally also followed a recovery in U.S. technology shares, encouraging investors to look past concerns over elevated valuations in artificial intelligence-linked stocks. The positive global cues point to a firm opening for Indian benchmark indices, although the market’s ability to sustain gains could hinge on crude oil prices, foreign fund flows and developments in the Middle East. 

Crude oil prices rose again on Wednesday after the United States announced a fresh round of strikes on Iran, stoking concerns over potential supply disruptions. Brent crude traded around $92 a barrel, raising inflation concerns for oil-importing economies. 

Higher crude prices could weigh on Indian equities, given the country’s heavy dependence on imported oil, while putting pressure on sectors exposed to fuel costs. The oil market has remained volatile as investors assess conflicting signals over the possibility of a ceasefire. 

Earlier hopes of renewed diplomatic efforts between Washington and Tehran had pushed oil prices lower and supported risk appetite. However, fresh military action and concerns over disruptions to key shipping routes have kept a geopolitical premium in crude prices. A prolonged rise in energy costs could also raise the risk of a broader stagflationary shock by fuelling inflation while weighing on economic growth. 

Wall Street Rebounds 

U.S. equities provided a positive lead for global markets, with technology shares rebounding as investors turned their attention towards the ongoing corporate earnings season. The Dow Jones Industrial Average rose 0.74%, the S&P 500 gained 0.89% and the Nasdaq Composite jumped 1.29%. 

A recovery in semiconductor stocks helped lift risk appetite, with investors looking ahead to earnings from major companies including Alphabet, Intel and Texas Instruments. 

The U.S. dollar remained firm while Treasury yields edged higher, reflecting caution over inflation and the outlook for interest rates. A sustained rise in oil prices could further complicate the policy outlook for central banks if higher energy costs begin to feed into broader inflation. 

European Shares Rise 

European equities also closed higher, with technology and mining stocks supporting the broader market despite concerns over elevated oil prices and geopolitical risks. 

The region, however, remains vulnerable to a renewed spike in energy costs, particularly if the conflict disrupts global oil and gas supplies for an extended period. Rising crude prices have already revived concerns over inflation, bond yields and the pace of monetary easing. 

For European markets, the combination of higher energy costs and a potentially weaker economic outlook remains a key risk, even as resilient corporate earnings provide some support to investor sentiment. 

Source

•  Exchanges