Pre-Market Update: Nifty 50, Sensex Likely to Open Lower as GIFT Nifty Signals Weak Start

Pre-Market Update at 7:40 AM: Indian benchmark indices are likely to open lower on Monday, September 7, as GIFT Nifty signals a weak start amid surging crude oil prices and escalating tensions between the U.S. and Iran. At around 7:10 AM, GIFT Nifty was trading near 23,977.5, indicating a discount of around 33 points against the previous close.

The domestic market ended mixed in the previous session. The Sensex gained 362.57 points, or 0.48 per cent, to 76,515.43, while the Nifty 50 declined 24.25 points, or 0.10 per cent, to 23,897.70. The India VIX fell 5.8 per cent to 10.68, indicating subdued near-term volatility.

The NSE has revised its 15-minute pre-open session from September 7, while keeping the overall 9:00 AM–9:15 AM timing unchanged. Under the revised framework, the order-entry period will be divided into phases.

From 9:00 AM to 9:05 AM, both limit and market orders will be allowed. From 9:05 AM to 9:10 AM, only limit orders will be permitted. Order matching and trade confirmation will take place between 9:10 AM and 9:12 AM, followed by a three-minute buffer before regular trading begins.

The changes apply across the equity cash segment, including main-board stocks, SME shares, REITs, InvITs and partially paid-up shares. The revised mechanism is aimed at improving price discovery and aligning the pre-open session with the new Closing Auction Session framework.

Crude oil prices have emerged as the biggest risk for Indian equities following fresh escalation in the Middle East. Brent crude climbed to around USD 96.80 per barrel, while WTI crude rose to about USD 92.14 after retaliatory attacks involving the U.S. and Iran near the Strait of Hormuz.

The Strait of Hormuz handles roughly one-fifth of global oil transit, making any prolonged disruption a major concern for global energy markets. For India, sustained higher crude prices could increase the import bill, put pressure on the rupee and raise inflation and input-cost concerns. This could particularly weigh on oil-sensitive sectors and limit the upside in domestic equities.

Despite the negative GIFT Nifty signal, Asian markets opened strongly on Monday. Japan's Nikkei 225 gained nearly 2 per cent, while South Korea's Kospi advanced more than 3 per cent. Strength in Asian equities could provide some cushion to Indian markets during the opening session.

However, positive regional cues may be offset by rising energy prices and geopolitical risks. Investors are likely to remain cautious until there is greater clarity on developments around the Strait of Hormuz.

Wall Street ended lower on Friday after a stronger-than-expected U.S. employment report increased expectations that the Federal Reserve could maintain a hawkish stance.

The U.S. economy added 162,000 jobs in August, above expectations, while the unemployment rate remained at 4.1 per cent. Following the data, the Dow Jones declined 0.51 per cent, the S&P 500 fell 0.38 per cent and the Nasdaq Composite dropped 0.29 per cent. The U.S. 2-year Treasury yield also climbed to 4.37 per cent.

The stronger labour market has increased uncertainty around the Federal Reserve's interest-rate trajectory and could keep global equities under pressure.

Investors will closely monitor U.S. CPI inflation data due later this week for fresh clues on the Federal Reserve's interest-rate trajectory. The inflation reading could influence U.S. Treasury yields, the dollar and global risk appetite.

U.S. PPI data is scheduled for Thursday, followed by CPI inflation data on Friday, making the second half of the week particularly important for global markets.

Foreign portfolio investors remained sellers in the Indian equity market on Friday, recording net selling of Rs 3,112 crore. Domestic institutional investors provided strong support, with net purchases of Rs 8,920 crore.

The divergence between foreign and domestic institutional flows will remain an important market factor, particularly if elevated crude oil prices trigger further risk-off positioning among foreign investors.

The Indian rupee gained around 0.9 per cent last week, helped by dollar selling by the Reserve Bank of India and inflows through special schemes. However, rising crude oil prices and higher U.S. yields could put renewed pressure on the currency this week.

The 10-year Indian government bond yield ended last week at around 6.9625 per cent after rising for a third consecutive week, highlighting continued pressure in the domestic bond market.

From a technical perspective, the Nifty 50 remains below its 50-EMA on the hourly chart, keeping the short-term trend weak. The 24,000–24,200 zone is likely to act as an important resistance area.

On the downside, immediate support is seen around 23,830, followed by 23,700. A sustained move above 24,200 could improve the short-term structure, while a break below 23,830 may increase selling pressure.

GIFT Nifty is around 23,977, signalling a weak opening, while the Nifty 50's previous close stands at 23,897.70. The India VIX is at 10.68, Brent crude is around USD 96.80 per barrel and WTI crude is around USD 92.14 per barrel.

FII selling of Rs 3,112 crore and DII buying of Rs 8,920 crore will also remain in focus. Technically, Nifty 50 support is placed at 23,830 and 23,700, while resistance is seen in the 24,000–24,200 zone.

The revised NSE pre-open session rules will also take effect from September 7, with the 9:00 AM–9:15 AM session now divided into separate order-entry, matching and buffer phases.

The key global triggers include U.S. CPI inflation data later this week, while U.S.-Iran tensions and potential disruption around the Strait of Hormuz remain the major risks for global markets.

Overall, Indian equities are likely to begin Monday's session on a cautious-to-negative note. Strong Asian markets may provide some support, but the sharp rise in crude oil prices, geopolitical tensions and uncertainty over the Federal Reserve's policy stance could cap gains.

The Nifty 50's ability to hold the 23,830 support zone will be important for determining the near-term market direction. A sustained break below this level could increase selling pressure, while a move above 24,200 would improve the short-term setup.

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

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