Nifty, Sensex open flat as Brent near $90/barrel and Fed concerns weigh on sentiment

MUMBAI: Indian benchmark equity indices opened on a subdued note on Thursday as rising crude oil prices and escalating tensions in the Middle East weighed on investor sentiment, offsetting support from resilient domestic fundamentals and foreign investor buying. At the opening bell, the BSE Sensex was trading at 77,638.86, down 15.74 points, or 0.02 per cent, while the Nifty 50 stood at 24,249.55, lower by 0.65 points.

Market experts said investors remained cautious as Brent crude hovered near $90 per barrel amid renewed geopolitical tensions involving the US and Iran.

Ajay Bagga, a banking and market expert, said, “Indian markets are trying to decouple from the global chip carnage, but crude remains the tether. This morning the $90 Brent and renewed US attacks on Iran will keep Indian markets subdued”. He said the widening conflict involving key maritime trade routes, including the Strait of Hormuz, the Red Sea and the Caspian Sea, has raised concerns over global energy supplies and market stability.

Investors also assessed the US Federal Reserve’s decision to keep interest rates unchanged at 3.5-3.75 per cent. However, the 9-3 split vote within the Federal Open Market Committee (FOMC), with three policymakers favouring a rate hike, strengthened expectations that the Fed could tighten monetary policy further if inflation remains elevated.

Among sectoral indices on the NSE, Nifty IT gained 1.39 per cent, Nifty Pharma rose 0.54 per cent, Nifty Auto advanced 0.32 per cent, Nifty Oil & Gas added 0.26 per cent, Nifty FMCG climbed 0.18 per cent, and Nifty Metal edged up 0.05 per cent. On the other hand, Nifty PSU Bank and Nifty Media traded in the red during early trade. Brent crude was trading at $89.58 per barrel at the time of reporting.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said higher crude prices and the Fed’s hawkish stance are major headwinds for equities. “The spike in Brent crude again to near $90 following the escalation of the US-Iran conflict is a strong headwind. The Fed’s split decision indicates that a rate hike may come soon”, he said.

However, he added that India’s resilient economy, strong domestic fundamentals and foreign portfolio investors (FPIs) turning net buyers in July are likely to provide support to the market despite global volatility.

In the broader Asian markets, Japan’s Nikkei 225 gained more than 1 per cent to trade at 61,820. Taiwan’s Weighted Index was up 0.18 per cent at 40,146, while South Korea’s KOSPI advanced 0.28 per cent to 5,678. On the other hand, Singapore’s Straits Times and Hong Kong’s Hang Seng traded in the red during early trade. (ANI)