Indian stock markets are likely to open on weak note on Monday as US-Iran tension has once again escalated. Gift Nifty at 24,000 (at 730 IST), is ruling marginally lower against the Friday’s close of 24,048. With lack of domestic triggers, analysts expect the market to move on sideways with global sentiment driving the sentiment. The focus will be on select counters and SMID (Small and mid-cap space), they added.
Ajit Mishra – SVP, Research, Religare Broking Ltd, said renewed geopolitical tensions and a sharp rise in crude oil prices remained the biggest headwinds for Indian equities. Brent crude gained around 8% last week and remained close to $95 per barrel as escalating tensions involving the United States and Iran increased concerns over potential disruptions to energy supplies through the Strait of Hormuz.
“Investors continued to assess the possibility of a Federal Reserve rate hike following persistent inflation concerns and elevated bond yields. However, dovish comments from Fed Governor Christopher Waller temporarily reduced expectations of an immediate rate increase and supported a relief rally in global equities towards the end of the week. The subsequent US employment report showed non-farm payrolls rising by 1,62,000 in August, significantly above expectations and keeping the Fed’s policy outlook uncertain,” he said.
According to Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, the broader direction will also remain closely tied to global macro variables. If crude oil prices and U.S. Treasury yields stay elevated, the upside in Indian equities is likely to remain capped. “Conversely, a moderation in both crude and bond yields, coupled with the Nifty holding the 23,800–23,600 support zone, could create the conditions for another recovery attempt,” he opined.
For Ponmudi R, CEO, Enrich Money, investors will keep a close watch on the Indian rupee, which has recently strengthened on the back of robust foreign-currency inflows and continued RBI support. India’s foreign-exchange reserves rose to a record $740.8 billion as of August 28, providing the central bank with a substantial buffer to manage currency volatility amid an uncertain global backdrop.
Rahul Singh, CIO – Equities, Tata Asset Management, highlighted the three key signals investors should watch in the current market environment, along with his sectoral views and preferred fund categories.
“Indian equities are seeing encouraging support from improving corporate earnings, particularly in sectors where results have surpassed market expectations, alongside the return of foreign investor flows. However, the steady pipeline of IPOs, institutional share sales and block deals continues to absorb investor capital, which could keep markets range-bound in the near term despite improving fundamentals. Against this backdrop, we remain constructive on banking and financial services and continue to see opportunities in healthcare, while staying watchful on information technology as the growth outlook continues to evolve. In our view, investors should continue to adopt a selective and diversified approach, with fund selection guided by their financial goals, investment horizon and risk appetite. Depending on individual requirements, investors may explore Flexi Cap, Multi Cap, Multi Asset Allocation and Balanced Advantage Funds, while sector-focused funds should be considered only by those who understand the associated concentration risks.”