Markets Today: Sensex Falls 105 Points, Nifty Opens Below 23,900 As Oil, Geopolitical Risks Weigh

Markets Today, September 7: Indian equity benchmarks opened lower on Monday, September 7, as elevated crude oil prices and heightened tensions in the Middle East kept investors cautious despite strong gains across Asian markets. The domestic market also remained under pressure from concerns over inflation, interest rates and the broader impact of higher energy costs.

At 9:19 am, the BSE Sensex was down 105.47 points, or 0.14%, at 76,409.96, while the NSE Nifty declined 46.80 points, or 0.20%, to trade at 23,850.90.

Market sentiment remained cautious despite positive cues from Asian equities. Japan’s Nikkei 225 gained around 2%, while South Korea’s Kospi advanced about 3%. The gains in regional markets followed a strong US jobs report, which supported

expectations for global economic growth, although it also reduced the likelihood of near-term interest-rate cuts.

For Indian equities, however, the sharp rise in crude oil prices remains a major concern. Brent crude was around $96.45 a barrel, while US West Texas Intermediate crude was trading near $91.85 a barrel. Brent had gained nearly 10% last week amid concerns over potential supply disruptions linked to escalating US-Iran tensions and developments around the Strait of Hormuz.

Higher crude prices are particularly important for India because the country relies heavily on imported oil. A sustained increase in energy prices could put pressure on the import bill, inflation, corporate input costs and the rupee, thereby limiting the scope for aggressive buying in equities.

Among sectoral indices, Nifty IT was the biggest drag in early trade, falling 1.50%, while Nifty Media declined 2.40%. Nifty Auto, FMCG, Metal, Private Bank, Realty and Cement were also trading lower. Nifty Pharma was largely flat, while Nifty Chemicals gained 0.14%.

The broader market also opened weak. Nifty 100 declined 0.19%, Nifty 200 fell 0.18% and Nifty 500 was down 0.18%. The Nifty Midcap 100 and Nifty Smallcap 100 declined 0.16% and 0.17%, respectively.

India VIX, a measure of expected market volatility, rose 1.45% to 10.84.

V K Vijayakumar, chief investment strategist at Geojit Investments Ltd, said, “The market has been drifting down for four weeks now. A relevant question is: why this downtrend despite positive fundamental news regarding the economy and corporate earnings? One explanation is that worsening tensions in the Middle East and the the consequent elevated crude prices are weighing on the market. While this is relevant, there is another domestic factor which is impacting  the market. This is the ongoing IPO boom and the spate of big IPOs expected to hit the market this month.”

He added that there are 11 mainboard IPOs hitting the market this week. The mega IPOs from NSE and Jio also are expected this month. These mega IPOs are expected to absorb humongous liquidity from the market. Investors are looking for listing gains from these IPOs. In brief, the present focus is on the IPO market rather than the secondary market. This is likely to continue throughout September.

“The better-than-expected jobs data in the US has raised the prospects of a rate hike by the Fed in September. This also will weigh on equity and bond markets globally,” Vijayakumar said.