Gift Nifty Falls 34 Points, Signals Muted Start For Markets As Iran-US Tensions Keep Oil Prices Elevated
The Gift Nifty pointed to a cautious start for Indian equity markets on Monday, with the index trading at 24,396.5, down 34.5 points or 0.14% as of 7:37 am. The subdued indication comes as investors remain wary of persis
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Gift Nifty Falls 34 Points, Signals Muted Start For Markets As Iran-US Tensions Keep Oil Prices Elevated
The Gift Nifty pointed to a cautious start for Indian equity markets on Monday, with the index trading at 24,396.5, down 34.5 points or 0.14% as of 7:37 am. The subdued indication comes as investors remain wary of persistent geopolitical tensions in West Asia, elevated crude oil prices and the potential impact of global monetary policy on capital flows.
The weak opening signal suggests that the Nifty 50 could remain range-bound with a cautious bias, with investors likely to track developments around the Strait of Hormuz, oil prices and global markets before taking fresh positions.
US-Iran Tensions Keep Investors Cautious
Asian markets were largely subdued on Monday as investors continued to monitor the conflict in the Middle East and its implications for global energy supplies. The lack of progress towards resolving the Iran-related tensions has kept risk appetite under pressure, while concerns over shipping disruptions through the strategically important Strait of Hormuz remain high.
At least 11 people were killed in Israeli strikes in southern Lebanon on Saturday, according to Lebanon’s health ministry, adding to concerns that the conflict could escalate further.
Crude oil remains one of the biggest risks for global markets. Brent crude was steady at around $88.50 a barrel after gaining 6% last week, while US West Texas Intermediate (WTI) crude slipped 0.3% to $82.12 a barrel after rising 5.4% in the previous week.
Ponmudi R, CEO of Enrich Money, said Indian equity markets are likely to remain range-bound with a cautious bias as geopolitical tensions continue to weigh on risk appetite.
“Ongoing disruptions to regional shipping, Iran’s assertion that the Strait of Hormuz remains under its control, and renewed Israeli strikes in Lebanon have heightened concerns over further escalation and prolonged disruptions to global energy and trade routes,” Ponmudi said.
He noted that WTI crude remains elevated at around $82 a barrel, while gold is holding near $4,400 an ounce as investors assess incoming US economic data and the Federal Reserve’s monetary policy outlook.
From a technical perspective, the 24,500-24,600 zone is expected to remain an important resistance area for the Nifty 50. According to Ponmudi, a decisive move above 24,600 could improve sentiment and open the way towards the 24,800-25,000 range.
On the downside, 24,250-24,300 is the key support zone. “Holding this band is essential to avert deeper weakness and keep the current range-bound setup intact,” he said.
A decisive break below 24,250 could intensify selling pressure and drag the index towards the psychologically important 24,000 level.
Global Markets Remain Mixed
Asian markets were largely muted on Monday. MSCI’s broadest index of Asia-Pacific shares outside Japan was flat, while Japan’s Nikkei rose 0.4%. Australia’s resources-heavy index slipped 0.3%, while South Korean markets remained closed for a public holiday.
Meanwhile, European and US equity futures remained mildly positive. EUROSTOXX 50 futures rose 0.2%, while S&P 500 and Nasdaq futures gained 0.1% and 0.2%, respectively.
US stocks had ended last week at record levels as expectations of an immediate Federal Reserve rate hike weakened following softer economic data. Investors are now looking for further clues about the US central bank’s policy direction.
Fed Minutes, US Data In Focus
The minutes of the Federal Reserve’s July policy meeting, scheduled for Wednesday, will be closely watched by global investors. Markets will look for clues about the debate within the Federal Open Market Committee and the outlook for the Fed’s September policy decision.
The outcome could influence US Treasury yields, the dollar and foreign portfolio flows into emerging markets such as India.
Recent US economic data has strengthened expectations that the Federal Reserve may have room to keep monetary policy from becoming tighter. US retail sales declined in July, marking the first monthly fall in nine months, while consumer sentiment weakened more than expected.
The August S&P Purchasing Managers’ Index data will be another important indicator this week as investors assess whether the recent acceleration in US business activity can continue.
Oil, Gold and Dollar In Focus
Oil prices will remain particularly important for Indian markets because a sustained rise in crude can increase India’s import bill and put pressure on inflation and the rupee.
Gold, meanwhile, remained firm near $4,381 an ounce after gaining 0.8% last week as investors continued to seek safety amid geopolitical uncertainty.
In currency markets, the US dollar remained under pressure following softer economic data. The euro rose 0.1% to around $1.1578, while the dollar slipped 0.1% against the Japanese yen to 159.15.
For Indian equities, the combination of elevated crude prices, geopolitical uncertainty and upcoming US monetary-policy signals could keep volatility high.
