Pre-Market Update: GIFT Nifty Signals Mildly Positive Start; Crude, U.S. Yields and Hormuz Risks Remain in Focus

Pre-Market Update at 7:40 AM: GIFT Nifty was quoted at 23,225, up 84.50 points or 0.37 per cent from the Nifty 50's previous close of 23,140.50, according to the latest available pre-market quote. The indication points to a mildly positive opening for Indian equities on Monday, although the premium remains relatively modest after the Nifty 50's seventh consecutive weekly decline.

The Nifty 50 ended Friday at 23,140.50, gaining 77.40 points or 0.34 per cent after recovering from an intraday low of 23,020.95. The rebound followed Thursday's 1.64 per cent sell-off, leaving the index close to the important 23,000 support zone.

U.S. equities ended higher on Friday. The S&P 500 rose 0.51 per cent to 7,743.41, the Nasdaq Composite gained 0.48 per cent to 27,068.72, and the Dow Jones advanced 0.93 per cent to 51,828.62. Technology stocks remained firm, while softer crude prices provided some relief to inflation-sensitive assets.

The U.S. 10-year Treasury yield, however, remained elevated at around 5.17 per cent, keeping financial conditions tight. High yields and geopolitical uncertainty remain important counterweights to the strength in U.S. equities.

Asian markets began the new week with mixed signals. The latest available market snapshot showed the Nikkei 225 at 66,364, up 1.30 per cent, while the Hang Seng was at 24,510, down 1.01 per cent. The latest confirmed Shanghai Composite level was 3,888.37, down 1.22 per cent on September 24. The Kospi's latest confirmed close was 7,080.92, with South Korea returning to trading on Monday after the Chuseok holiday.

European markets ended the latest session mixed to lower. The FTSE 100 declined 0.24 per cent to 10,679.99, the DAX fell 0.57 per cent to 25,266.53 and the CAC 40 declined 0.52 per cent to 8,081.43.

The weekend geopolitical developments could remain important for global markets. Shipping through the Strait of Hormuz slowed sharply over the weekend following tanker attacks, while U.S.-Iran talks stalled. Separately, Iran's military said it was prepared for possible renewed U.S. attacks after the U.S. rejected an Iranian proposal linked to reopening the strait.

Brent crude futures settled at USD 104.32 per barrel, down 2.14 per cent on September 25, while WTI crude ended at USD 92.57, lower by 2.16 per cent. The decline offers some relief to oil marketing companies, airlines and crude-intensive sectors such as paints. However, developments around the Strait of Hormuz remain a significant supply-risk variable for the next trading session.

Gold futures ended at USD 4,320.50 per ounce, up 0.52 per cent, while silver futures closed around USD 64.71, up 1.11 per cent.

The Dollar Index closed around 100.97, down 0.32 per cent on Friday, but remained higher over the week as hawkish Federal Reserve expectations and elevated Treasury yields supported the dollar.

The Indian rupee closed around Rs 95.81 per U.S. dollar on Friday, compared with Rs 95.96 previously. The currency remained close to the Rs 96 level despite RBI intervention and softer oil prices.

The U.S. 10-year Treasury yield ended Friday at 5.17 per cent after touching 5.22 per cent during the week. Elevated U.S. yields remain a negative factor for emerging-market equities as they increase the relative attraction of dollar assets and can contribute to foreign portfolio outflows.

Foreign Institutional Investors remained net sellers of Rs 3,693.90 crore in the cash market on September 25, while Domestic Institutional Investors bought Rs 2,838.20 crore. The latest monthly data also points to continued foreign selling pressure despite support from domestic institutions.

The Nifty 50 closed at 23,140.50 on Friday after moving between an Intraday low of 23,020.95 and a high of 23,162.70. The Sensex ended at 73,895.74, with an intraday high of 73,968.05 and low of 73,477.77.

For the Nifty 50, 23,000 remains the immediate support level. A decisive break below this zone could expose 22,700 and then 22,500. On the upside, 23,200 to 23,300 remains the first resistance zone. For Bank Nifty, support is placed around 55,000 to 54,900, while 55,900 to 56,000 remains the immediate recovery hurdle.

India VIX closed at 12.16, down 4.16 per cent on Friday after rising sharply earlier in the week. The decline indicates some cooling in near-term volatility, although the weekly increase and ongoing geopolitical risks continue to keep the volatility backdrop important for investors.

Monday's domestic economic calendar includes August industrial production and manufacturing production data, scheduled for release at 10:30 AM. The calendar lists industrial production growth at 6.7 per cent previously and manufacturing production growth at 7.3 per cent.

Proposed IRDAI insurance distribution reforms, including changes to commission structures and expense limits, remain a key sector-specific trigger. The proposed changes could affect insurance distributors and commission-dependent businesses, while the regulator expects the reforms to improve transparency and digital adoption.

Bima Sugam is another development in focus, with IRDAI expecting the digital insurance marketplace to launch by November. The platform is intended to improve transparency and digitise insurance distribution, potentially supporting wider digital insurance adoption.

Developments on the U.S.-China front could also influence market sentiment. The two countries agreed to reduce tariffs on about USD 30 billion of non-sensitive goods and establish an AI incident communication channel. The measures reduce some trade friction, although several strategic differences remain.

RBI staff said India's economy remains resilient despite higher energy prices and geopolitical risks, with Q1 FY27 growth at 7.8 per cent. The assesSMEnt provides a supportive domestic macroeconomic backdrop, although higher energy costs remain a risk.

The government has retained H2 FY27 gross market borrowing at Rs 7.86 lakh crore. The borrowing programme remains relevant for domestic bond yields and interest-rate-sensitive sectors.

The Strait of Hormuz remains a key risk for the coming session. Shipping activity through the strait slowed sharply over the weekend following tanker attacks. If the disruption persists, it could create upside pressure on crude prices and weigh on oil-importing sectors.

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

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