Pre-open Points to Subdued Start as Middle East Keeps Investors on Edge

Mumbai, July 16: Indian shares inched up at pre-open on Thursday signalling a subdued start for benchmarks as Middle East continued to keep investors and oil prices on edge. 

Nifty 50 inched up 0.12% and Sensex ticked up 0.19% at pre-open while Gift Nifty rose 0.17%.  

Energy stocks could attract investor attention after the Centre hiked windfall levies on diesel and aviation turbine fuel exports in response to the recent spike in international crude prices. 

Meanwhile, the earnings season gathers pace, with IT majors Wipro and Tech Mahindra slated to report their June-quarter performance later on Thursday. The results are expected to provide fresh cues for technology stocks and the broader market.  

Among key earnings, HDFC Life Insurance delivered double-digit profit growth in the June quarter, aided by strong premium inflows. In contrast, ICICI Lombard General Insurance reported a sharp decline in earnings as elevated claims and weaker performance in its commercial insurance portfolio weighed on profitability. 

Meanwhile, lender HDB Financial Services posted an increase in quarterly profit, driven by robust credit growth and an improvement in asset quality. 

Asian markets under pressure 

Asian equities traded sharply lower on Thursday, with semiconductor stocks leading losses ahead of quarterly earnings from Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker and a key supplier of advanced AI chips. 

TSMC is expected to report a fifth consecutive quarter of record earnings, with analysts forecasting a 59% year-on-year jump in April-June net profit. Investors remained cautious ahead of the closely watched results, given their implications for the global artificial intelligence and semiconductor sectors. 

Japan’s Nikkei dropped 2.8%, while South Korea’s Kospi slumped 6.5%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1%, reflecting broad-based weakness across the region. 

Wall Street gains on inflation, earnings 

US equities ended higher overnight as investors rotated from semiconductor stocks into the Magnificent Seven technology names and banking shares following strong earnings from major lenders. However, Asian markets remained under pressure due to their heavier exposure to chipmakers. 

Sentiment on Wall Street was also supported by encouraging inflation data. The latest producer price figures, coupled with softer consumer inflation released earlier, reinforced hopes that the Federal Reserve could keep interest rates unchanged in the near term, pushing Treasury yields lower. 

Corporate earnings added to the positive tone, with major banks delivering better-than-expected quarterly results. Investors are now awaiting earnings from more large-cap companies for further clues on the health of Corporate America. 

The Dow Jones Industrial Average rose 0.29%, the S&P 500 gained 0.38%, while the Nasdaq Composite advanced 0.62%. 

European equities remain subdued 

European markets ended largely flat on Wednesday despite a strong revenue outlook from Dutch semiconductor equipment maker ASML. 

Although the company’s guidance underscored resilient demand for AI-related chipmaking equipment, broader markets struggled as geopolitical tensions overshadowed company-specific optimism. Rising crude oil prices and concerns over their impact on inflation and economic growth kept investors cautious. 

Oil extends winning streak 

Crude oil prices climbed for a fourth consecutive session after US strikes on Iranian targets heightened fears of supply disruptions in the Middle East. 

Brent crude traded above $85 per barrel, while US West Texas Intermediate hovered around $80 per barrel. Traders continued to monitor developments around the Strait of Hormuz, a key global oil transit route, for signs of further escalation. 

The sustained rise in oil prices has reignited concerns about inflation, potentially complicating the policy outlook for central banks that had recently seen encouraging signs of easing price pressures. 

For India, elevated crude prices remain a significant headwind, as higher energy costs can widen the current account deficit, weaken the rupee and stoke domestic inflation. 

Source

• Exchanges