India equities hold steady as Asian tech sells off, oil rises
Indian stocks are set for a flat open, insulated from a severe regional tech sell-off but facing pressure from rising crude prices tied to the US-Iran conflict in the Strait of Hormuz.
Indian equity benchmarks are poised for a muted start on Thursday, shaking off a heavy sell-off that swept through broader Asian markets. Gift Nifty indicators hovered around the 24,106 level, reflecting a roughly 39-point premium over the previous close. This points to a steady opening for the Nifty 50, which settled Wednesday with a modest 0.11% gain at 24,078.50, while the Sensex added 0.17% to close at 77,185.43.
The regional divergence stems from a sharp repricing of technology shares. South Korea’s Kospi crashed 6.17% and the Kosdaq slumped 4.34%. Japan’s Nikkei 225 dropped 3.03% and the Topix fell 1.17%.
Concerns over stretched tech valuations, compounded by escalating Middle Eastern tensions, drove the broad-based declines. Hong Kong’s Hang Seng index futures bucked the trend, however, indicating a higher opening.
For India, the primary market vulnerability lies in energy costs. Brent crude futures climbed for a fourth consecutive session, adding 0.4% to reach $85.28 a barrel. The price action follows US strikes targeting Iranian military capabilities used to threaten vessels in the Strait of Hormuz.
Iran’s Revolutionary Guards stated the vital shipping chokepoint would remain closed until the US ends its “acts of aggression.” The guards also warned that other regional oil export routes could become targets, a threat that directly impacts India's import bill.
“The near-term outlook for Indian equities remains mixed. Elevated geopolitical tensions in West Asia, Brent crude oil prices above $85 per barrel and the rupee weakening to around one-month low, are expected to keep volatility elevated. However, the ongoing Q1 results season is expected to provide support to the market through stock-specific action,” said Siddhartha Khemka, Head of Research, Wealth Management, at Motilal Oswal Financial Services Ltd.
Counterbalancing this geopolitical risk is a constructive shift in US inflation data. The US Producer Price Index unexpectedly fell 0.3% in June, marking the largest decline in 14 months. The data easily beat economist forecasts for a flat reading and propelled Wall Street higher, with Apple rallying 4.01% and PayPal jumping 16.87%.
The Nasdaq Composite gained 0.62% to 26,269.23, while the S&P 500 rose 0.38% and the Dow Jones Industrial Average added 0.29%. Elsewhere in Asia, the Bank of Korea raised its benchmark interest rate by 25 basis points to 2.75%, marking its first hike in three and a half years. Gold held steady at $4,056.59 per ounce.
