Gift Nifty Trades 36 Points Lower: Indian Markets Likely To Open Cautiously; Crude Oil, US-Iran Tensions In Focus

The Gift Nifty was trading at 23,974, down 36 points or 0.15%, as of 7:42 am on Monday, September 7, indicating a cautious start for Indian equity markets. The market is likely to remain sensitive to developments in West Asia, amid escalation in tensions involving the US and Iran around the Strait of Hormuz.

Elevated crude oil prices could weigh on investor sentiment and raise concerns over inflation, input costs and India’s import bill, according to experts.

Ponmudi R, CEO of Enrich Money, a Sebi-registered online trading and wealth-tech firm, said, “Indian equity markets are likely to begin the session on a cautious footing, with elevated crude oil prices and escalating tensions in the Middle East continuing to overshadow otherwise supportive

regional cues.”

Asian equities provided some support to the broader risk sentiment on Monday. Japan’s Nikkei 225 climbed around 2%, while South Korea’s Kospi advanced about 3%. MSCI’s broadest index of Asia-Pacific shares outside Japan also gained around 0.9%. The gains came after a robust US jobs report was seen as supportive of global growth, although the stronger economic backdrop also kept concerns about the path of interest rates alive.

Crude oil, however, remained the key risk for markets. Brent crude rose 0.2% to $96.45 a barrel after gaining nearly 10% last week, while US West Texas Intermediate crude advanced 0.4% to $91.85 a barrel. Continued strength in oil prices could be particularly important for India given its dependence on crude imports.

The latest escalation in the Middle East has heightened concerns about potential disruptions to energy supplies through the Strait of Hormuz. Tehran has said it would announce a restricted zone outside the strait, while the latest US-Iran military confrontation has added to uncertainty in global energy markets.

“The sustained rise in oil prices has reinforced worries over inflation, higher input costs and India’s import bill, limiting investors’ willingness to chase equities at higher levels,” Ponmudi said.

Investors will also track the US inflation data due later this week. The August US Consumer Price Index report, scheduled for Friday, is expected to show a 0.2% rise in core CPI, with a 0.3% reading seen as a risk. A stronger-than-expected inflation print could put further upward pressure on US Treasury yields and complicate expectations around the Federal Reserve’s interest-rate path.

The 10-year US Treasury yield was near 4.784%, close to its highest level since late 2023. A hotter inflation reading could push the yield closer to the psychologically important 5% level, potentially creating additional pressure on equity valuations globally.

Markets are also assessing the policy outlook for other major central banks. The European Central Bank is widely expected to raise rates to 2.75% this week, while markets are pricing a significant probability of further tightening from the Bank of Japan. The combination of elevated energy prices and potentially tighter monetary policy could keep global markets volatile.

Technical View

Ponmudi said the Nifty’s broader technical structure continues to remain weak, with the index trading below key moving averages and maintaining a descending price structure. On the upside, the 24,000-24,200 zone remains the immediate resistance band. The 24,000 psychological mark is particularly important, as the index has struggled to sustain gains above this level. A sustained move above 24,200 could improve the near-term structure and provide some relief to the prevailing bearish sentiment. However, unless the index decisively reclaims this resistance band, recovery attempts are likely to face selling pressure.

“On the downside, 23,800 remains the immediate support zone. A decisive break below 23,800 could intensify selling pressure and expose the index to the 23,600 region. Holding above 23,800 will therefore be important to prevent further deterioration in the short-term setup. Momentum indicators remain weak, reinforcing the prevailing cautious bias. Overall, the near-term technical outlook remains cautious,” he added.

Friday’s session had offered some respite to domestic equities, with the Sensex rising 362.57 points, or 0.48%, to 76,515.43 and snapping a four-session losing streak. The Nifty gained 24.25 points, or 0.10%, to finish at 23,897.70, after touching an intraday high of 24,005.75.