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The Gift Nifty signalled a weak start for Indian equity markets on Friday as elevated crude oil prices, escalating geopolitical tensions and a selloff across global markets weighed on investor sentiment. The Gift Nifty was trading at 23,339.5, down 120.5 points or 0.51%, as of 8:24 am on Friday, pointing to a negative opening for the domestic benchmark indices.
Market sentiment has been hit by a sharp rise in crude prices. WTI crude was trading in the $103-104 per barrel range after gaining around 7.5% in the previous session, while Brent crude moved towards $108 a barrel. The spike in oil prices has raised concerns over India’s import bill, inflation and corporate profitability, given the country’s dependence on crude imports.
“Indian equity
markets are expected to remain under pressure today as a sharp rise in crude oil prices continues to weigh on investor sentiment,” said Ponmudi R, CEO of Enrich Money, a Sebi-registered online trading and wealth-tech firm.
He said geopolitical risks had also remained elevated, with developments around the Red Sea and Strait of Hormuz adding to concerns over global energy supplies and shipping routes. The resulting increase in the geopolitical risk premium is likely to keep crude prices volatile, he added.
Global market cues were also weak. Asian equities were trading sharply lower, with Nikkei 225 and Kospi falling more than 2.5%, while weak overnight cues from Wall Street added to the risk-off mood.
In the US, wholesale inflation rose 0.4% in August, taking annual producer price inflation to 5.4% from 4.8% in July, largely driven by higher energy costs. Investors will now focus on upcoming US CPI data for further clues on the Federal Reserve’s interest-rate outlook ahead of its September 16 policy decision.
“The combination of weaker global equities, surging crude oil prices and persistent geopolitical uncertainty is likely to keep the domestic market on the defensive at the open,” Ponmudi said.
On the technical front, the 23,500-23,600 zone is likely to remain an immediate resistance area for the Nifty 50. A sustained move above 23,600 could open the way for a recovery towards 23,800. On the downside, 23,200 is seen as a crucial support level, with a break below it potentially dragging the index towards 23,050-23,000.
Ponmudi said the Nifty continues to have a bearish technical structure across the short, medium and long term, although the deeply oversold RSI leaves room for a short-term relief bounce. A meaningful recovery, however, would require sustained buying and a decisive move above key resistance levels.
