Benchmark indices are likely to open cautiously on Monday despite GIFT Nifty pointing to a mildly positive start, as pushed crude oil prices higher and triggered a risk-off mood across Asian markets.
GIFT Nifty futures were at 24,222.5 as of 8:11 am, indicating that the Nifty 50 could open above Friday’s close of 24,175.65. The benchmark had ended lower for a third straight week, with investors already grappling with elevated oil prices, high US bond yields and uncertainty over the interest-rate outlook.
The positive indication from GIFT Nifty, however, comes against a deteriorating geopolitical backdrop. US forces struck two Iranian launchers, marking the first known American strikes on since late July. The escalation has raised concerns over a prolonged conflict and its impact on global energy supplies.
Brent crude jumped about 2.5% to around $90 a barrel, while Asian equities fell 0.7%. Higher crude prices are a key concern for India, one of the world’s largest oil importers, as a sustained rise in energy costs could put pressure on inflation, corporate margins and the broader economic outlook.
The escalation also comes at a time when global bond yields remain elevated. Fed Chair Kevin Warsh’s reiteration of the central bank’s focus on controlling inflation has strengthened expectations that US interest rates could remain higher for longer, adding to pressure on risk assets and foreign flows into emerging markets.
Monday’s trading session could also see sharp moves towards the close as MSCI’s latest index changes are implemented. The quarterly changes will take effect from September 1, with four Indian stocks added to the MSCI Global Standard index and three removed.
The rebalancing will be the first major MSCI event under India’s new closing-auction system, which has already resulted in sharp swings in benchmark indices, particularly around monthly derivatives expiry.
“With these passive fund flows executed around the closing auction, the final half-hour could see outsized moves in affected stocks and the broader index, potentially making the closing print less representative of underlying market sentiment,” said Hariselvan Radhakrishnan, founder and CEO of HST Wealth.
This could make Monday’s closing session particularly volatile, even if trading remains relatively stable through most of the day.
Among individual stocks, HDFC Bank is likely to remain in focus after India’s largest private lender said on Saturday that would not seek reappointment when his term ends in October.
The bank is expected to consider Deputy Managing Director Kaizad Bharucha among the candidates for the next CEO, Reuters reported, citing people familiar with the matter. The leadership transition adds another stock-specific trigger to an already cautious market.
Overall, Indian equities are likely to begin the week on a guarded note: GIFT Nifty points to a mildly higher opening, but rising crude, the escalation in the Iran war, elevated US bond yields and the MSCI rebalancing could keep volatility high.
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