Pre-Market Update: GIFT Nifty Signals Cautious Start as U.S. Yields Hover Near 5%

Pre-Market Update at 7:40 AM: Indian equities are set for a cautious start on Monday, with GIFT Nifty indicating a muted opening. At 07:35 IST, GIFT Nifty was trading 23 points, below the Nifty 50's Friday close of 23,346.40, trading at the level of around 23,323.40. 

Wall Street ended mixed on Friday. The S&P 500 gained 0.17 per cent to 7,650.50, while the Nasdaq Composite advanced 0.40 per cent to 26,522.55. The Dow Jones Industrial Average declined 0.18 per cent to 51,682.64. Semiconductor stocks supported technology shares, while the U.S. 10-year Treasury yield returned to around 5 per cent, keeping pressure on rate-sensitive assets. The Federal Reserve's recent 25-basis-point rate increase took its policy rate to 3.75-4.00 per cent, with the outlook for further tightening remaining a key macro factor.

Asian markets were mostly higher in early Monday trade. At around 06:09 IST, South Korea's Kospi gained about 1.1 per cent, while the MSCI Asia-Pacific index excluding Japan rose 0.3 per cent, led by technology and chip stocks. Japan was closed for the Silver Week holiday, while Nikkei futures advanced 0.5 per cent. Exact current-session levels for the Hang Seng and Shanghai Composite could not be independently verified at the pre-market cut-off.

European equities ended sharply lower on Friday. The FTSE 100 declined 1.45 per cent to 10,659.13, Germany's DAX fell 1.60 per cent to 25,304.06 and France's CAC 40 dropped 1.49 per cent to 8,065.02 as higher bond yields and tighter monetary conditions weighed on equities.

Crude oil prices eased in early Asian trade. At 07:37 IST, Brent crude was down 1.48 per cent at USD 101.06 per barrel, while WTI crude declined 1.84  per cent to USD 98.41. The decline came as Saudi oil shipments recovered despite continued Houthi attacks. Lower crude prices can provide some cost relief to aviation, paints and other oil-consuming sectors, although Brent above USD 100 remains a significant inflation and import-cost risk for India.

Gold and silver also traded lower. COMEX gold was around USD 4,404 per ounce, down 0.47 per cent, while silver was near USD 66.90, down 0.37 per cent. The latest Friday MCX close was around Rs 154,199 per 10 grams for gold and Rs 241,415 per kg for silver. The MCX Monday morning session had not opened at the publication cut-off.

The Dollar Index was near 100.24, while USD/INR spot trading had not opened. The rupee's latest verified Friday close was Rs 95.8750 per U.S. dollar, with the currency down 0.3 per cent for the week. The U.S. 10-year Treasury yield was around 5 per cent. Sustained elevated U.S. yields could reduce the relative appeal of emerging-market assets and keep foreign institutional flows and the rupee sensitive to dollar strength.

Domestic institutional flows provided some support. Foreign institutional investors were net buyers of Rs 599.54 crore in the cash market on September 18, while domestic institutional investors purchased shares worth Rs 1,019.69 crore. However, another market report cited FPI net selling of around Rs 600 crore and DII buying of around Rs 1,020 crore on Friday.

The Nifty 50 closed 0.33 per cent higher at 23,346.40 on Friday after moving between 23,286.60 and 23,389.15. The Sensex declined 0.03 per cent to 74,294.96, with the index trading in a range of 74,294.96 to 74,728.44.

For the Nifty 50, immediate support levels are placed at 23,302, 23,277 and 23,238, while resistance is seen at 23,380, 23,404 and 23,443. The broader support zone remains around 23,200-23,100, while 23,600 is a key hurdle. Another technical view places support at 23,000-23,100 and sees the recovery potentially extending towards 23,550 if Brent crude remains below USD 96.

Bank Nifty closed at 56,358.70. Support is placed around 56,122 and 55,886, while resistance is seen near 56,546 and 56,734. India VIX declined around 7.3 per cent to 11.38, indicating lower near-term implied volatility despite continued weakness in the broader technical structure.

The NSE IPO enters its final bidding day on Monday, with the price band set at Rs 1,700-1,785 per share. The Rs 22,561.57 crore issue was fully subscribed by Day 2. Strong primary-market demand could absorb some liquidity from the secondary market.

In the commodity derivatives segment, SEBI's early pay-in framework becomes effective today. Eligible positions can receive margin relief, while mark-to-market margins will continue to apply. The move could improve capital efficiency for eligible participants in commodity derivatives.

Bond yields and liquidity will also remain on investors' radar. India's benchmark 10-year government bond yield ended last week at 7.0686 per cent, while RBI bond sales drained surplus liquidity. Sustained elevated yields could remain a headwind for rate-sensitive sectors.

The Federal Reserve's policy rate at 3.75-4.00 per cent and U.S. Treasury yields near 5 per cent remain important global cues. Higher rates and yields can weigh on high-valuation and rate-sensitive stocks while influencing FII flows.

Crude oil remains another key market driver. Brent has retreated from recent highs following a recovery in Saudi shipments, providing some relief to oil-consuming sectors. However, Brent at above USD 100 continues to pose inflationary and import-cost risks for India.

The NSE IPO closes today, while Augmont Enterprises, Lumino Industries, Symbiotec Pharmalab and Elitecon International are scheduled to report Quarterly Results. No major CPI, IIP or PMI release was independently verified for Monday.

Stocks in the F&O ban list include SAIL, Manappuram Finance, Inox Wind and Bandhan Bank. Securities enter the F&O ban period after crossing 95 per cent of the market-wide position limit.

The rupee pared its initial gains to close largely unchanged at around Rs 95.89 against the U.S. dollar on Friday amid a strong U.S. currency. Investors will track movements in the dollar, U.S. yields, crude oil and foreign flows for further direction.

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