India equities flat as Strait of Hormuz risks offset US rate hopes
Indian benchmark indices are headed for a cautious open as rising crude prices from escalating US-Iran military strikes outweigh positive sentiment from cooler US inflation data.
Gift Nifty indicators signal a flat start for Indian equities on Thursday, with early pricing around 24,055.5, a 12.3-point discount to the previous Nifty futures close. The muted outlook comes despite a strong Wall Street session, as investors weigh the threat of oil supply disruptions against signs of easing US inflation.
Brent crude climbed 0.4% to $85.28 a barrel, marking a fourth consecutive day of gains, while WTI rose 0.5% to $80.02. The rally followed US strikes on Iranian military infrastructure near the Strait of Hormuz. Iran's Revolutionary Guards warned the waterway would remain closed until "acts of aggression" end and threatened other regional oil export routes.
Those supply fears pushed broader Asian markets sharply lower, with Japan's Nikkei 225 falling more than 3% and South Korea's Kospi dropping over 6% in early trading. Wall Street ended higher overnight, supported by a surprise drop in the US Producer Price Index. The PPI for final demand fell 0.3% month-on-month in June, the sharpest decline since April 2025, following a downwardly revised 0.6% increase in May. Economists had expected prices to remain unchanged.
The cooler inflation data, alongside a strong start to the US earnings season, reinforced expectations that the Federal Reserve will adopt a less hawkish monetary policy stance. Gold prices reflected this dynamic, with spot gold largely flat at $4,056.59 per ounce and US gold futures for August delivery rising 0.3% to $4,062.50. Spot silver slipped 0.3% to $57.61.
On Wednesday, the Nifty 50 closed up 0.11% at 24,078.50 and the Sensex added 0.17% to finish at 77,185.43. Analysts expect the Indian market to remain range-bound moving forward. Ajit Mishra, Senior Vice President of Research at Religare Broking, noted a continued "tug of war between bulls and bears" but highlighted that rotational buying supports a "buy-on-dips" approach for stronger stocks.
Near-term upside in India remains capped by elevated crude prices and a persistently weak rupee. Ponmudi R, CEO of Enrich Money, warned that investors are likely to refrain from aggressive directional positions until the geopolitical situation clarifies. For the Bank Nifty, Ponmudi R identified immediate resistance between 58,000 and 58,200, with support sitting at 57,500. A sustained breakout could push the index toward 58,600, while a break below support could trigger a decline to 57,200.
