Indian stock markets are likely to open flat on Wednesday, despite positive global cues. With US stocks hitting a peak overnight, Asian stocks are also ruling higher. However, GIFT Nifty at 22,740 indicates a flat-to-negative open, while Nifty futures are at 22,800.
Ponmudi R, CEO of Enrich Money, said Indian equities are likely to extend their recovery, supported by improving global sentiment and a positive close across U.S. markets overnight. “Asian markets are also trading largely steady, with the Nikkei 225 and KOSPI posting marginal gains, providing a relatively supportive external backdrop for domestic equities. The recovery, however, is likely to remain sensitive to shifts in the global macroeconomic and geopolitical environment,” he said.
Geopolitical risks and crude prices remain concerns
Geopolitical risks remain elevated, while crude oil prices have rebounded modestly from recent lows. WTI crude is trading near $90 a barrel, while Brent remains above $100. Any renewed escalation in geopolitical tensions could push oil prices higher and weigh on risk appetite, adding to concerns over India’s inflation and external balances.
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Rising global bond yields add to market concerns
Jefferies’ Indian equity outlook said markets are facing rising yields with the US 10Y Treasury yield above 5% (20+yr high), Japan’s 10Y yield above 3% (30yr highs), and UK & German govt bond yields also moving higher. Apart from inflation, markets are also pricing in worsening fiscal balances, declining participation from foreign central bank buyers, and large debt-funded capex for AI buildout.
“We believe risk-reward is becoming more favourable for large-caps on better relative valuations vs. Mid-caps, while the earnings growth gap is narrowing over FY26-28E. Increase weight on Reliance in our Model Portfolio with stock at attractive valuations (8.4x 1yr fwd EV / EBITDA, 23% below 10yr avg) and upgrade possibilities on higher GRMs. Kotak Mahindra Bank is added on leadership overhang removal, potential growth acceleration from 15%+ levels and stock at 1.8x P/ABV FY27E, ~50% disc. to 10-yr avg. Wealso add Welspun Corp which is should benefit (30%+ EBITDA and EPS Cagr over FY26-29E) from a multi-year upcycle in oil & gas infra spending in US and Middle East, supported by local manufacturing. We trim weight in rate sensitives viz. NBFCs, Real estate (still OWT), Cons. discretionary (Eicher),” Jefferies said.
Investors await policy stance and forward guidance
According to Ponmudi, Investors will focus closely on the policy stance and forward guidance, particularly against the backdrop of August CPI inflation at 4.82%, which has reinforced concerns over inflationary pressures. Elevated crude prices remain an additional external risk, with implications for both India’s inflation trajectory and current-account position.