Shares Jump At Pre-Open Pointing To Positive Start Despite Adverse Global Cues

Mumbai, September 15: Indian shares rose at pre open signalling a higher start for benchmarks even as oil and global yields stayed elevated and shares across Asia struggled. 

Nifty 50 rose 0.6% while Sensex advanced 0.5% at pre open.  

Indian equities have remained under sustained pressure, with both the Nifty 50 and Sensex declining around 4.8% each over the past five weeks as investors grapple with a worsening global macroeconomic backdrop.  

A sharp rise in crude oil prices has added to concerns over inflation, prompting markets to reassess the outlook for interest rates. In the US, expectations of tighter monetary policy have strengthened ahead of the Federal Reserve’s decision later this week, as higher energy costs threaten to keep price pressures elevated.  

The impact has already been visible in the bond market. The benchmark 10-year US Treasury yield crossed the psychologically important 5% mark on Monday for the first time since October 2023. Such a move is significant for global markets as higher US yields can tighten financial conditions, increase borrowing costs and reduce the relative appeal of riskier assets, including equities.  

India is facing its own inflationary challenge. Consumer price inflation accelerated in August, with price pressures broadening beyond food and transportation. The pickup has increased expectations that the Reserve Bank of India could be pushed towards a rate hike as early as next month, adding another potential headwind for domestic equities.  

Explosives and ammunition maker Solar Industries India said its subsidiary will acquire South Africa-based Omnia Holdings in an all-cash transaction valued at around $1.36 billion.  

Coforge said DK Singh, chair of its nomination and remuneration committee, has stepped down citing “differences and tension”. His resignation comes days after chairman Om Prakash Bhatt quit following an internal audit review.  

KEC International secured new orders worth ₹1,303 crore, adding to its order book and strengthening its business pipeline. 

Asian Markets 

Asian equities traded lower on Tuesday after Wall Street ended in the red in the previous session, with investors turning cautious amid concerns over stretched valuations in technology stocks, rising bond yields and elevated oil prices. 

Japan’s Nikkei and South Korea’s Kospi came under pressure, while technology shares remained among the key drags after a sharp overnight selloff in US chip stocks. Investors are also keeping a close watch on developments in the Middle East, with disruptions to energy supplies adding to inflation concerns. 

The weakness in Asian markets is likely to weigh on the opening sentiment in India, particularly after domestic benchmarks have already remained under pressure in recent sessions. 

US Markets 

Wall Street ended lower on Monday, with technology and semiconductor stocks bearing the brunt of the selling. The Dow Jones Industrial Average fell 0.29%, while the S&P 500 declined 0.48% and the Nasdaq Composite shed 0.56%. 

The Philadelphia Semiconductor Index dropped sharply, reflecting concerns over the sustainability of the massive investment cycle surrounding artificial intelligence. Nvidia fell 3.4%, while Broadcom declined 4.8%. 

The selloff followed warnings around the rapid pace of AI development, adding to investor concerns that expectations surrounding AI-related spending and earnings may have become too stretched. 

US stock futures also remained under pressure, pointing to a cautious global risk environment going into the Indian session. 

Oil Prices 

Crude oil remained a major concern for markets, with Brent crude rising above $108 a barrel after fresh attacks on Saudi energy infrastructure and disruptions to oil flows intensified fears over global supplies. 

Brent crude rose 3.6% to $108.31 a barrel, while US West Texas Intermediate crude gained 3.3% to $103.35 on Monday. 

For India, which imports a large proportion of its crude oil requirements, the sharp rise in oil prices is a key negative. Sustained crude prices above $100 a barrel could increase pressure on the trade deficit, the rupee and inflation expectations while raising input costs for several industries. 

Source

•  Exchanges