New Delhi: Indian equity markets opened on a weak note on Monday, with benchmark indices Sensex and Nifty falling in early trade as renewed tensions in West Asia pushed crude oil prices higher and weighed on investor sentiment.
The BSE Sensex fell 226.60 points, or 0.29 percent, to 77,028.56, while the NSE Nifty declined 120.40 points, or 0.50 percent, to 24,053.55 in initial trading.
Market analysts attributed the cautious mood to a combination of rising geopolitical risks, weak global market cues and continued selling by foreign institutional investors.
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Among the 30 Sensex constituents, Infosys, Tata Steel, InterGlobe Aviation, Bajaj Finance, Tata Consultancy Services and Titan were among the prominent laggards.
On the other hand, HDFC Bank gained more than 2 percent, while Kotak Mahindra Bank and Bharti Airtel were also trading in positive territory.
Oil prices added to market concerns. Brent crude, the global benchmark, rose 2.33 percent to USD 90.19 a barrel, raising concerns over inflationary pressures and the potential impact of higher energy costs on the Indian economy.
“Indian equities are beginning the week against a backdrop of multiple headwinds,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments.
He pointed to growing concerns over the US interest-rate outlook following comments by Fed chief Kevin Warsh that persistent inflation above the central bank’s long-term target would require further action. Markets, he said, have interpreted the remarks as a possible indication of a rate hike at the Federal Open Market Committee’s September 15-16 meeting.
Higher US bond yields could further weigh on equities by making fixed-income assets more attractive and tightening global financial conditions, Vijayakumar said. The renewed escalation in tensions between the US and Iran, meanwhile, has pushed Brent crude above the USD 90 mark, adding another layer of uncertainty for markets.
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Global cues were also unfavourable. South Korea’s Kospi, Japan’s Nikkei 225, China’s SSE Composite and Hong Kong’s Hang Seng were all trading lower in Asian markets. US equities had also closed in negative territory on Friday.
“Indian equity markets are expected to maintain a cautious bias as renewed US-Iran military escalation has brought global energy-supply concerns back into focus,” said Ponmudi R, CEO of Enrich Money. The resulting rise in crude prices and broader risk aversion have also weighed on Asian markets, he added, noting that Japan’s Nikkei and South Korea’s Kospi were both down more than 1 percent in early trade.
Selling by overseas investors remained another concern. Foreign Institutional Investors (FIIs) sold Indian equities worth Rs 5,039.80 crore on Friday, according to exchange data.
The domestic market had ended the previous session on a positive note. On Friday, the Sensex advanced 330.92 points, or 0.43 percent, to 77,264.51, while the Nifty gained 84.80 points, or 0.35 percent, to close at 24,175.65.
With geopolitical tensions pushing oil prices higher and global investors reassessing the US interest-rate outlook, market participants are likely to remain focused on crude movements, foreign fund flows and developments in West Asia for further direction.
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