Pre-Market Update: GIFT Nifty Signals Cautious Start as Global Cues, Iran Tensions Weigh on Markets

Pre-Market Update at 7:40 AM: GIFT Nifty was trading around 24,170 in early trade on August 25, down 41 points from its previous close, signaling a cautious start for Indian equities. Global risk factors, weakness in technology stocks and concerns over elevated crude oil prices are likely to keep sentiment under pressure.

The domestic market ended lower in the previous session. The Nifty 50 declined 32.95 points, or 0.14 per cent, to close at 24,219.05, while the Sensex fell 171.72 points, or 0.22 per cent, to 77,369.11. Investors remained cautious amid developments surrounding fresh U.S. sanctions on Iran and broader global uncertainty.

Wall Street ended mixed on Monday as investors assessed geopolitical developments, upcoming corporate earnings and monetary policy signals. The S&P 500 fell 21.51 points, or 0.3 per cent, to 7,652.86, while the Nasdaq Composite declined 200.26 points, or 0.8 per cent, to 25,980.19. The Dow Jones Industrial Average outperformed, gaining 140.15 points, or 0.3 per cent, to close at 53,417.16.

Technology and Semiconductor stocks remained under pressure ahead of Nvidia's earnings, with investors reassessing valuations and the outlook for artificial intelligence spending. Financial stocks, meanwhile, provided support to the Dow. Markets are also awaiting further U.S. Federal Reserve commentary for signals on inflation and the interest rate outlook.

Asian markets opened weak, tracking the overnight pressure on global technology stocks and geopolitical concerns. In the previous session, the Nikkei 225 closed at 65,528.09, down 0.74 per cent, while the Hang Seng declined 1.89 per cent to 25,517.33. The Shanghai Composite fell 0.59 per cent to 3,882.01 and the Kospi dropped 3.12 per cent to 6,696.96.

European markets also ended mostly lower. Germany's DAX declined 0.75 per cent, France's CAC 40 fell 0.32 per cent, while the U.K.'s FTSE 100 edged up 0.04 per cent.

Geopolitical developments surrounding expanded U.S. sanctions on Iran remain a key factor for global markets. Investors are assessing the potential impact on oil supplies and risks surrounding the Strait of Hormuz.

Brent crude was trading near USD 90.72 per barrel, while WTI crude stood around USD 86.02 per barrel. Although oil prices stabilised after falling more than 2 per cent in the previous session, elevated crude prices remain a concern for India, particularly for oil marketing companies, airlines and energy-intensive industries.

Gold remained firm amid safe-haven demand and uncertainty surrounding global financial markets. International gold prices were near USD 4,700 per ounce, while MCX gold futures traded around Rs 1,63,550 per 10 grams. International silver was near USD 69 per ounce, with MCX silver trading around Rs 2,46,150 per kg.

The Dollar Index strengthened towards 99.00, supported by safe-haven demand. Meanwhile, the U.S. 10-year Treasury yield eased to around 4.709 per cent amid concerns surrounding bond market stability and expectations of possible Treasury measures. Lower yields could offer some support to equity valuations, although elevated interest rates continue to influence global capital flows.

The Indian rupee remained under pressure due to elevated crude prices and dollar demand. The rupee had closed at 95.7050 against the U.S. dollar on August 20, compared with 95.7525 in the previous session, with investors monitoring crude oil movements and possible RBI intervention.

Foreign institutional investors (FIIs) bought Indian equities worth Rs 1,181.66 crore on August 24, while domestic institutional investors (DIIs) were also net buyers to the tune of Rs 2,493.41 crore. 

The latest U.S. sanctions on Iran could continue to weigh on risk appetite while supporting crude oil prices. Nvidia's upcoming earnings will be closely tracked for indications on artificial intelligence spending and technology sector valuations. Expectations surrounding possible U.S. Treasury bond market measures could influence global liquidity and currency movements.

Continued strength in gold may keep gold financing companies and commodity-linked businesses in focus. MCX could also remain active amid elevated gold and silver prices and higher trading activity. Meanwhile, oil marketing companies, aviation stocks and paint manufacturers may react to further movement in crude prices.

Technology stocks could remain volatile amid weakness in global semiconductor shares and concerns over artificial intelligence investment trends. Energy stocks will remain sensitive to developments surrounding Iran and crude oil prices, while gold financing and commodity-linked financial companies may stay in focus due to elevated bullion prices.

Disclaimer: The article is for informational purposes only and not investment advice.

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