Key Takeaways
- Indian shares likely to open marginally higher after four consecutive weekly declines.
- Geopolitical tensions in the Middle East could dampen investor sentiment.
- Foreign investors net sold Indian shares worth 31.12 billion rupees on Friday.
Indian shares were expected to open marginally higher on Monday, following four consecutive weekly declines. This positive outlook was supported by the GIFT Nifty futures, which were at 23,977.5 points as of 7:09 a.m. IST, indicating a potential positive start for the Nifty 50 index, which closed at 23,897.7 on Friday.
However, escalating tensions in the Middle East could weigh on risk sentiment, keeping investors cautious. The United States announced that it had struck three Iranian tankers on Saturday after Iran launched ballistic missiles at two U.S. Navy ships, marking the latest escalation in tensions between the two countries.
In response, Iran vowed to step up efforts to tackle problems created by U.S. sanctions, which have crippled its economy. A senior Iranian official warned of a “painful response” if Iran faces further attacks. These developments added to the uncertainty surrounding the Indian market.
Despite the geopolitical concerns, Asian shares advanced after a robust U.S. jobs report reinforced confidence in global growth. MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.9%, and Brent crude futures were up 0.4% at near $97 per barrel.
Ponmudi R, CEO of Enrich Money, stated that while the benchmark Nifty 50 and Sensex have shed 2.7% and 2.5%, respectively, over the past four weeks, due to higher oil prices and global bond yields, investors were likely to remain cautious about building aggressive positions. Foreign investors net sold Indian shares worth 31.12 billion rupees on Friday, as per provisional data. They have offloaded $782 million worth of shares so far in September.
The U.S. Federal Reserve is also expected to consider hiking interest rates at its meeting this month, which could further impact investor sentiment. While the market may see a modest gain, the ongoing geopolitical tensions in the Middle East and the potential interest rate hike by the Federal Reserve could keep investors on edge.
Investors will also focus on changes to pre-open session rules, which bring the mechanism closer to the newly launched closing auction session (CAS) that has triggered sharp swings at the market close. This new mechanism could influence market behavior and investor sentiment in the coming days.
The Indian market is closely watching these developments, with a cautious approach expected from both domestic and foreign investors. The overall sentiment remains cautious, with the market poised for a modest gain but with significant geopolitical risks continuing to cloud the near-term outlook.
