Pre-Market Update: GIFT Nifty Signals Positive Start on August 21; Global Yield and Oil Concerns Persist

Pre-Market Update at 7:40 AM: GIFT Nifty was trading around 24,332, indicating a positive start for the Indian stock market on Friday, August 21. GIFT Nifty signalled an opening gain of around 44 points.

The positive opening indication follows Thursday's recovery, when the Nifty 50 snapped its seven-session losing streak and gained 153.05 points, or 0.64 per cent. The benchmark recovered from lower levels but formed a small-bodied candle, suggesting that the market may be entering a consolidation phase rather than confirming a decisive trend reversal.

U.S. stock markets ended sharply lower on Thursday as rising Treasury yields, elevated crude oil prices and renewed inflation concerns weighed on investor sentiment. The S&P 500 declined 0.9 per cent to 7,641.16, while the Dow Jones Industrial Average fell 1.3 per cent to 52,759.21. The Nasdaq Composite dropped 1 per cent to 26,067.17.

Higher U.S. Treasury yields remained a key concern for global equities, as rising borrowing costs can put pressure on stock valuations. Weakness in Walmart shares amid concerns over consumer spending also affected sentiment, while rising crude oil prices added to inflation worries.

Asian markets opened on a mixed note on Friday as investors assessed rising global bond yields, higher energy prices and concerns around global growth. Japan's Nikkei remained sensitive to movements in global bond markets, while Hong Kong and mainland Chinese equities tracked expectations around growth and policy support. South Korea's Kospi remained relatively stronger, supported by technology stocks.

Overall, risk sentiment across Asia remained cautious as investors monitored the outlook for interest rates, energy prices and global economic growth.

Brent crude traded above USD 93 per barrel on Friday and was on track to post a second consecutive weekly gain, rising more than 5 per cent so far this week. West Texas Intermediate crude gained around 3 per cent to USD 88.15 per barrel, with concerns over potential supply disruptions keeping prices elevated.

Higher crude oil prices could increase pressure on downstream sectors. Oil marketing companies may face concerns over marketing margins, while aviation companies could see higher fuel costs. Paints, chemicals and Logistics companies may also face increased input costs.

Gold remained firm amid safe-haven demand. Spot gold was trading near USD 4,514.23 per ounce and had gained around 3.2 per cent during the week. Silver was trading around USD 68.03 per ounce. Meanwhile, the U.S. 10-year Treasury yield remained elevated near 4.7 per cent. Higher U.S. yields can reduce the attractiveness of emerging-market assets and influence foreign institutional investment flows.

The Dollar Index weakened, supporting precious metals. The Indian rupee is likely to remain sensitive to crude oil prices, foreign fund flows and movements in the U.S. dollar.

The Nifty 50 closed at 24,231.85 on Thursday, gaining 153.05 points, or 0.64 per cent. The index opened higher and remained in positive territory for most of the session before witnessing some profit booking near the highs.

Foreign institutional investors (FIIs) turned net sellers in the Indian cash equity market on August 20, selling shares worth Rs 583.36 crore. FIIs recorded gross purchases of Rs 11,411.73 crore and gross sales of Rs 11,995.09 crore during the session.

Domestic institutional investors (DIIs) continued to provide strong support to the market, remaining net buyers for the session. DIIs purchased equities worth Rs 3,537.71 crore, with gross buying at Rs 16,932.72 crore and gross selling at Rs 13,395.01 crore.

Several domestic developments are likely to remain on investors' radar. SEBI has directed brokers to accept orders during the five-minute transition period before the Closing Auction Session from September. The move is aimed at improving liquidity and price discovery.

LIC has received approval from the RBI to increase its stake in HDFC Bank up to 9.99 per cent, supporting sentiment towards the banking major. Corporate earnings have also remained a positive domestic factor, with Nifty 50 companies reporting average profit growth of around 18 per cent in the June quarter, marking the strongest growth in 10 quarters.

Foreign portfolio investors have also reportedly turned buyers in August, with equity inflows of Rs 16,621 crore during the first half of the month, supporting domestic market liquidity.

Tata Sons will remain in focus amid uncertainty surrounding its classification as an upper-layer NBFC and potential listing requirements. The development could have implications for sentiment across Tata Group companies.

HDFC Bank is likely to remain in focus after LIC received approval to increase its stake in the bank up to 9.99 per cent. Reliance Industries gained 0.62 per cent on August 20 amid the broader market recovery.

Power Finance Corporation and REC remain under pressure following rating changes and revised expectations surrounding the power financing space. LIC Housing Finance will also remain on investors' radar ahead of its Dividend record date.

ONGC and BPCL could remain sensitive to elevated crude oil prices. While upstream companies may benefit from higher crude prices, downstream companies could face pressure on margins. RailTel Corporation and Exide Industries will also remain in focus due to company-specific developments and result-related updates.

The banking sector could receive support from LIC's increased stake approval in HDFC Bank and stable credit growth trends. Energy stocks are likely to remain in focus as elevated crude prices affect upstream and downstream companies differently. IT stocks may react to overnight weakness in U.S. technology shares, along with movements in Treasury yields and broader global risk sentiment.

Overall, GIFT Nifty indicates a positive start for the Nifty 50 after Thursday's recovery. However, elevated crude oil prices and high U.S. Treasury yields remain key risks for the market. Investors will closely track global market movements, energy prices, institutional flows and stock-specific developments for further direction.

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

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