Bombay Stock Exchange (BSE) building in Mumbai. File
| Photo Credit: Reuters

Equity benchmark indices climbed in early trade on Tuesday (September 10, 2024) tracking a rally in global markets and fresh foreign fund inflows.

The 30-share BSE Sensex climbed 241.68 points to 81,801.22 in early trade. The NSE Nifty went up 78.4 points to 25,014.80.

Among the 30 Sensex firms, Power Grid, Bharti Airtel, Axis Bank, Tata Steel, NTPC, Sun Pharma, Larsen & Toubro and Titan were the biggest gainers.

Bajaj Finserv, Mahindra & Mahindra, Bajaj Finance and Kotak Mahindra Bank were among the laggards.

In Asian markets, Seoul, Tokyo and Hong Kong were trading higher while Shanghai quoted lower.

The U,S. markets ended significantly higher on Monday (September 9, 2024).

Foreign Institutional Investors (FIIs) bought equities worth ₹1,176.55 crore on Monday (September 9, 2024), according to exchange data. Domestic Institutional Investors (DIIs) also bought equities worth ₹1,757.02 crore.

Global oil benchmark Brent crude dipped 0.08% to $71.78 a barrel.

“With an overnight rebound on Wall Street, strong net buying from both FIIs and DIIs, and sluggish oil prices, bullish traders are expected to pursue bargains,” Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said.

The BSE benchmark Sensex rebounded 375.61 points or 0.46% to settle at 81,559.54 on Monday (September 9, 2024). The NSE Nifty went up by 84.25 points or 0.34% to finish at 24,936.40 after three days of fall.

Benchmark equity indices Sensex and Nifty tumbled in early trade on Wednesday. File
| Photo Credit: PTI

Benchmark equity indices Sensex and Nifty tumbled in early trade on Wednesday (September 4, 2024) after a record-breaking rally, tracking extremely weak trends from the global markets.

The 30-share BSE Sensex tumbled 721.75 points to 81,833.69 after a weak beginning to the trade. The NSE Nifty tanked 196.05 points to 25,083.80.

Among the 30 Sensex firms, JSW Steel, Infosys, Larsen & Toubro, State Bank of India, Tata Steel, Mahindra & Mahindra, Bharti Airtel and Axis Bank were the major laggards.

Asian Paints, Bajaj Finserv, Bajaj Finance, and Hindustan Unilever were the gainers.

In Asian markets, Seoul, Tokyo, Shanghai, and Hong Kong were trading sharply lower.

The U.S. markets ended significantly lower on Tuesday (September 3, 2024).

“The selloff in U.S. markets yesterday (Tuesday) was triggered by growth concerns. There are indications of U.S. manufacturing moving into contraction, thereby threatening the soft landing expectation, which has been the pillar of support for the mother market U.S. and consequently for other markets, too,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Halting its 10-day rally on Tuesday, the BSE benchmark dipped 4.40 points or 0.01% to settle at 82,555.44. The Nifty, however, eked out a marginal gain of 1.15 points to settle at 25,279.85, its highest-ever closing level.

In the 10-day rally, the BSE benchmark spurted 2,135 points, or 2.61%. Nifty has surged nearly 1,141 points or 4.59% in 14 straight days.

According to exchange data, Foreign Institutional Investors (FIIs) bought equities worth ₹1,029.25 crore on Tuesday. Global oil benchmark Brent crude declined 0.61% to $73.30 a barrel.

A customer holds hundred rupees Indian currency notes near a roadside currency exchange stall.
| Photo Credit: Reuters

The Indian rupee witnessed range-bound trading and settled for the day on a flat note at 83.97 (provisional) against the U.S. dollar on Tuesday (August 13, 2024), as weak domestic markets and a surge in crude oil prices weighed on investor sentiments.

Forex traders said risk aversion in the global markets amid heightened geopolitical tension in the Middle East between Israel and Iran also dented sentiments.

At the Interbank Foreign Exchange Market, the local unit traded in a tight range as it opened at 83.95 and finally settled at 83.97 (provisional) against the American currency, unchanged from its previous close.

On Monday, the rupee settled for the day lower by 2 paise at 83.97 against the American currency. The local unit had slumped 37 paise to settle at an all-time low of 84.09 against the U.S. dollar on August 5.

“We expect the rupee to trade with a slight negative bias on risk aversion in the global markets amid heightened geopolitical tension in the Middle East between Israel and Iran. Rising crude oil prices and weak domestic markets may also weigh on the domestic currency,” said Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas.

However, the mixed-to-weak U.S. dollar amid dovish comments from Fed speakers may support the rupee at lower levels.

“Investors may remain cautious ahead of the U.S. CPI, retail sales, and consumer confidence data from the U.S. this week,” said Mr. Choudhary, adding that the USD-INR spot price is expected to trade in a range of 83.75 to 84.25.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.06% higher at 103.19.

Brent crude, the global oil benchmark, declined 0.27% to $82.08 per barrel.

On the domestic macroeconomic front, the net direct tax collection in the country grew 22.48% to about ₹6.93 lakh crore as of August 11 of this fiscal.

The retail inflation eased to 3.54% with food prices falling after a good monsoon. It was the lowest in the last 5 years and has dipped below RBIs targeted rate of 4%.

However, India’s industrial production slowed to a five-month low of 4.2% in June 2024, mainly due to poor performance of the manufacturing sector, though power and mining sectors continue to perform well, as per official data released on Monday (August 12, 2024).

On the domestic equity market front, Sensex declined 692.89 points, or 0.87%, to 78,956.03 points. The Nifty fell 208.00 points, or 0.85%, to 24,139.00 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Monday as they offloaded shares worth Rs 4,680.51 crore, according to exchange data.

Oil pump jack is seen in front of displayed Israeli flag in this illustration taken, October 8, 2023.
| Photo Credit: Reuters

A protracted Israel-Hamas conflict could spur oil prices beyond India’s comfort zone and even if the government holds retail fuel prices ahead of critical elections, wholesale prices may spike and a higher import bill could pressure the rupee, according to experts.

Brent crude oil prices rose over 3% on Monday, crossing $87 a barrel even as equity markets around the world, including India, came under pressure as investors turned risk-averse and rushed to safe haven assets like gold.

Fears of a wider conflict between Israel and Hamas not only pulled down the NSE Nifty 0.72% or 141.2 points to 19,512.4, but also dragged trading volumes on the NSE to “the lowest in many weeks”, said Deepak Jasani, head of retail research at HDFC Securities.

Broad market indices fell more than the Nifty even as the advance-decline ratio fell sharply to 0.28:1, he added, stressing that the conflict is the latest negative trigger for markets that are already fretting about macroeconomic uncertainties in Europe and China, hawkish central banks and rising oil prices.

Also read: Israel-Palestine conflict LIVE updates on October 9

Beyond the short-term effect on markets, Bank of Baroda chief economist Madan Sabnavis said that if the war persists for even a fortnight or more, the oil dynamics will change. Crude oil prices going beyond $90 a barrel would pose trouble for the world economy as well as India.

“Iran joining the fray can affect the sea routes and push up transport and insurance costs. Higher crude prices will distort our balance of trade and current account deficit, thus putting pressure on the rupee,” Mr. Sabnavis noted.

For the government, there could be fiscal implications. With elections looming in several States and for the Lok Sabha in 2024, raising fuel prices may be an unlikely option, but higher costs will have to be absorbed either by oil marketing firms or the exchequer.

“Retail inflation can still be controlled by the government if it chooses to keep fuel prices unchanged. But wholesale price inflation will increase for sure. Some airlines have already increased fares after ATF price hikes, which is also inflationary,” the economist said.

Export earnings could also be hit as Israel buys around $5.5-6 billion of refined petroleum products a year from India.

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