India stocks set for flat open as chip selloff, Gulf tensions weigh
Indian equities are poised for a muted opening as a global retreat in semiconductor stocks and escalating US-Iran military tensions pressure regional sentiment and push the rupee to a four-day low.
Indian equities are signalling a flat start on Friday, with GIFT Nifty down 13 points, or 0.05 per cent, at 24,082. The subdued mood follows a broad retreat in Asian markets, where Japan’s Topix fell 1.3 per cent, while S&P 500 and Hang Seng futures both dipped 0.3 per cent. Australia’s S&P/ASX 200 also declined 0.3 per cent, though Euro Stoxx 50 futures were unchanged.
The primary drag on regional benchmarks is a selloff in semiconductor stocks. Chipmakers pulled the Nasdaq and S&P 500 lower overnight, even as US economic data remained upbeat and the second-quarter earnings season showed early strength. Investors are increasingly questioning whether the massive capital pouring into artificial intelligence can justify current lofty valuations.
Geopolitical risks are compounding the tech-driven weakness. Oil prices inched higher after the US and Iran escalated attacks across the Gulf, effectively breaking a truce and limiting flows through the Strait of Hormuz. Tehran has also asked the Houthi movement to prepare to shut down the Red Sea export route. The resulting spike in crude volatility is directly impacting the Indian rupee, which depreciated for a fourth straight session, shedding 8 paise to settle at 96.33 against the US dollar.
The currency pressure underscores a broader divergence in global macro assets. The dollar is headed for a weekly decline after a softer-than-expected US inflation report reduced bets on imminent Federal Reserve rate hikes. However, the resurgence of Middle East hostilities has stoked fresh inflation concerns, lifting gold on Friday even as the metal tracks its largest weekly loss in six sessions.
Within India’s derivatives market, volatility expectations are cooling. India VIX, the market’s fear gauge, fell 3 per cent to settle at 12.88. Option chain data shows the heaviest put writing at the 24,000 strike, establishing that level as a crucial support floor for the Nifty. Traders are currently favouring a strategy of buying on dips near that support and selling on rises near resistance.
Kaynes entered the ban period in the futures and options segment on Friday after crossing 95 per cent of the market-wide position limit.
