Pre-Open Points To Mixed Start As Oil Remains Elevated

Mumbai, October 26: Indian shares diverged at pre open signalling a mixed start as oil remained elevated despite falling and coming off six-month high. 

Nifty 50 declined 0.5% and Sensex edged down 0.05% at pre open. 

The Nifty and Sensex had declined 2.4% and 2.2%, respectively, last week, falling in all four trading sessions as surging crude prices and tensions in the Middle East fuelled concerns about inflation and energy supplies.  

Foreign portfolio investors (FPIs) bought Indian equities worth Rs 890 crore on Friday, according to provisional data, emerging as net buyers in three of the past five trading sessions.  

Infosys cut its annual revenue growth guidance as a worsening slowdown in North America highlighted the disruption artificial intelligence is causing to the traditional IT services business.  

Kotak Mahindra Bank reported a better-than-expected quarterly profit, supported by stronger loan demand and lower provisions for bad loans.  

Dr Reddy’s Laboratories beat quarterly profit estimates, with resilient domestic demand helping offset weakness in its key US market. 

Asian markets decline 

Asian equities traded largely lower on Monday. Japan’s Nikkei 225 slipped 0.76%, following a 4% decline last week, while South Korea’s Kospi fell 1.6%, extending its monthly losses to nearly 20%. China’s blue-chip CSI 300 index dropped 0.7%. 

The weakness reflected concerns over rising energy costs and their potential impact on economic growth, with investors also positioning themselves ahead of key central bank decisions and a busy corporate earnings calendar. 

US, European futures trade mixed 

Among US equity futures, S&P 500 futures rose 0.08% while Nasdaq futures slipped 0.14%. In Europe, EURO STOXX 50 futures gained 0.2%, while DAX futures advanced 0.2% and FTSE futures rose 0.12%. 

Investors are bracing for quarterly results from major technology companies, including Microsoft, Alphabet and Amazon, as well as Intel and Sandisk. Their earnings are expected to provide fresh clues about the sustainability of artificial intelligence-led growth and whether substantial investments in the sector can justify elevated valuations. 

Attention is also turning to the US Federal Reserve’s policy decision later this week. While the central bank is widely expected to keep interest rates unchanged in October, persistent inflation has fuelled speculation about a possible rate hike in December. A stronger dollar and higher borrowing costs could weigh on emerging-market equities. 

Crude oil retreats but stays elevated 

Brent crude futures fell 1.9% to $114.5 per barrel, while US West Texas Intermediate crude declined 2.13% to $101.1. Prices retreated following reports of diplomatic efforts involving Qatar and Iran to ease regional tensions. 

However, Brent crude had surged 6.2% last week, recording its highest weekly close since mid-2022 amid concerns over potential supply disruptions following Houthi attacks in Saudi Arabia. 

For India, which relies heavily on imported crude, elevated oil prices pose a risk to the rupee, inflation and corporate margins, potentially limiting the scope for a sustained recovery in equities. 

Source

• Exchanges