Key Takeaways
- Indian shares edged higher after a volatile closing auction session.
- Brent crude prices surpassed $102 per barrel, stoking inflation concerns.
- The Nifty 50 and BSE Sensex settled 0.2% and 0.19% higher, respectively.
Indian stock markets showed a slight upward trend on Thursday, despite a volatile closing auction session. The Nifty 50 and BSE Sensex, key benchmarks, settled 0.2% and 0.19% higher, respectively, at 23,477.8 and 74,902.59. This marked a reversal from the slight losses recorded after the end of normal trading at 3:15 p.m. IST.
The volatility was expected to be elevated in the Sensex due to the expiry of its weekly derivatives contracts, a factor introduced in early August. The closing auction session, known for its last-minute swings, has amplified these fluctuations, given the relatively thinner liquidity during this period.
However, the broader small-caps and mid-caps lost 0.1% and 0.4%, respectively, as eight out of the 16 major sectors fell. The market's performance was largely muted throughout the regular trading session, with the Nifty and Sensex dropping 2.5% and 2.7%, respectively, so far in September, ending lower in six of the eight sessions this month.
The Middle East conflict and a jump in Brent crude prices above $102 per barrel kept investors jittery. Iran's attack on 10 ships near the Strait of Hormuz, following the U.S. sinking of five Iranian oil tankers, added to the geopolitical tensions. These events have left investors concerned about inflation and growth, particularly in import-oil-dependent India.
ONGC, the state-owned oil and gas company, gained 1.4%, supported by higher crude prices that boost revenues and profit margins of upstream oil producers. This gain was a notable exception in a market that was otherwise cautious, with the U.S. inflation data expected to provide further clarity on the Federal Reserve's policy decision next week.
Technical analysts warned that the market remains vulnerable to further correction, with fundamental macroeconomic trends continuing to deteriorate. Higher oil prices have also left investors nervous, as the U.S. producer price index data is expected later in the day, while the consumer price inflation report is scheduled for Friday.
Despite the volatility, the market's slight gains indicate a cautious optimism, as investors await key economic indicators and geopolitical developments. The ongoing conflict in the Middle East and the surge in oil prices continue to cast a shadow over the market's performance.
