Sensex, Nifty open in red as West Asia conflict, hawkish Fed commentary weigh on sentiment

NEW DELHI: Indian markets start the week in red as domestic equities face renewed selling pressure from escalating conflict in West Asia and hawkish commentary from the United States Federal Reserve. The BSE Sensex stood at 76,979.99 points, down by 284.52 points, or 0.37 per cent, while the NSE Nifty 50 stood at 24,117.55 points, declining 58.10 points, or 0.24 per cent.

Banking and market expert Ajay Bagga highlighted that global markets begin the week digesting three collisions at once, “a fresh flare-up in the Strait of Hormuz that has put a new war premium back into oil, a Federal Reserve chair who used Jackson Hole to warn that the inflation fight isn’t over, and an Nvidia earnings blowout that keeps the AI trade alive even as bond yields bite”.

At the time of reporting, Asian equities exhibited widespread weakness, led by drops in South Korea’s KOSPI (-1.46%) to 6,689.95, the Taiwan Weighted Index (-1.17%) to 45,789.14, and Japan’s Nikkei 225 (-1.08%) to 65,689.00 and GIFT Nifty fell 147.50 points (-0.61%) to 24,164.50. Opposing the downward trend, the Straits Times gained 0.45 per cent to reach 5,725.38, and Thailand’s SET Composite rose 0.18 per cent to 1,591.07.

Bagga mentioned that for Indian investors, a mixed earnings season, a still-deficient monsoon, and elevated crude is a “combination that argues for selective positioning rather than broad-based optimism”. “India heads into the second half of FY27 facing a genuine three-way squeeze: elevated crude, a below-normal monsoon, and a global backdrop where a hawkish Fed and a live Iran conflict are both headwinds for risk appetite,” he added.

On oil, India’s position is structurally uncomfortable as one of the world’s largest crude importers, sustained Brent prices in the high USD 80-90s directly pressure the current account, keep the rupee under depreciation pressure, and add to imported inflation “just as the RBI would prefer a benign backdrop.”

At the time of reporting, Brent Crude rose USD 2.00 (+2.27%) to USD 90.10 and WTI Crude Oil increased USD 1.69 (+2.03%) to trade at USD 85.09. Meanwhile, Gold retreated, falling USD 30.07 (-0.68%) to settle at USD 4,422.93.

Commenting on global developments, Devarsh Vakil of HSL Prime Research said, “Fed Chair Kevin Warsh maintained a data-dependent tone at Jackson Hole, reaffirming the 2% inflation target without providing explicit forward guidance. He stated the Fed ‘must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed’ — comments markets read as hawkish, lifting expectations of a rate hike at the September 16 Fed meeting. Higher rates are a headwind for emerging markets, including India.”

US indices stood in red, with Dow Jones Futures dropping 157.22 points (-0.29%) to 53,402.77. The S&P 500 closed down 19.23 points (-0.25%) at 7,711.76, while the tech-heavy Nasdaq slipped 138.93 points (-0.52%) to 26,402.42.

Vakil mentioned that Indian benchmarks traded range-bound amid high intra-week volatility, ending modestly lower and extending their consolidation to a fourth straight week. “DIIs continued to structurally absorb supply, offsetting FII selling — FIIs were net sellers of ~Rs 150 crore, against DII inflows of ~Rs 12,500 crore”, he added. (ANI)