Pre-Market Update: Nifty 50, Sensex Likely to See Positive Start as GIFT Nifty Rises; Crude, Gold in Focus

Pre-Market Update at 7:40 AM: The Indian stock market is likely to begin Monday, August 24, on a mildly positive note, with GIFT Nifty indicating a higher opening for the Nifty 50. However, elevated crude oil prices, geopolitical uncertainty surrounding Iran, high U.S. Treasury yields and upcoming global events could keep investors cautious.

GIFT Nifty was trading around 24,355, up about 69 points from Friday's Nifty 50 close, indicating a mildly positive start for domestic equities. Earlier readings had also placed GIFT Nifty near 24,329.50, up around 43.50 points from the previous Nifty futures close.

On Friday, the Nifty 50 gained 20.15 points, or 0.08 per cent, to close at 24,252 after moving between 24,206.80 and 24,284.05. The Sensex ended almost unchanged at 77,540.83, gaining just 3.11 points, or 0.004 per cent.

U.S. equities recovered on Friday after a volatile week. The Dow Jones Industrial Average rose 0.98 per cent to 53,277.01, while the S&P 500 gained 0.43 per cent and the Nasdaq Composite advanced 0.44 per cent. The recovery was supported by U.S. Treasury bond buyback measures, although elevated bond yields and high energy prices remain concerns.

For the week, the S&P 500 declined 1.43 per cent, the Nasdaq fell 2.05 per cent and the Dow lost 0.85 per cent. U.S. stock futures were marginally lower in early Monday trade.

Asian markets were mixed. The Nikkei 225 was down around 0.30 per cent, while the Hang Seng gained about 1.21 per cent and the Shanghai Composite was marginally higher. South Korea's Kospi also came under pressure, reflecting continued caution around technology and artificial intelligence-related stocks. Investors will also watch Nvidia's earnings later this week and Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium.

Geopolitical developments remain an important trigger for global markets. The U.S. is expected to announce additional sanctions against Iran, with Treasury Secretary Scott Bessent scheduled to outline the measures. The announcement follows stalled negotiations between the U.S. and Iran and could have implications for Middle East crude supplies. While oil prices declined in early Monday trading, the Strait of Hormuz remains a significant supply risk.

Crude oil prices fell by more than 1 per cent on Monday as investors booked profits ahead of the expected U.S. announcement on Iran. Brent crude was trading around USD 90.75 per barrel, down 3 per cent, while U.S. West Texas Intermediate crude stood near USD 86 per barrel, down 1.72 per cent.

However, both benchmarks gained more than 5 per cent last week, marking their second consecutive weekly advance. Persistently high crude prices remain a concern for India as they increase the country's import bill and could put pressure on inflation and the rupee. Aviation, paint, chemical and other oil-consuming companies could also face margin pressure if crude remains elevated.

Gold prices continued to rise amid geopolitical uncertainty and expectations surrounding upcoming U.S. inflation data and monetary policy signals. Spot gold climbed as much as 0.7 per cent to USD 4,636.34 per ounce, its highest level since May 15, while U.S. gold futures rose 0.3 per cent to USD 4,694.80. Gold had surged more than 5 per cent last week amid pressure on the dollar.

In the domestic market, the latest available MCX closing data showed gold at around Rs 1,61,305 per 10 grams, while silver was near Rs 2,47,010 per kg.

The U.S. 10-year Treasury yield remained elevated at around 4.71 per cent, which could continue to influence capital flows into emerging markets. Higher U.S. yields can reduce the relative attractiveness of risk assets and weigh on foreign investor sentiment.

Foreign portfolio investors remained net sellers on Friday, offloading Rs 542.7 crore worth of Indian equities, while domestic institutional investors purchased shares worth Rs 2,124.1 crore. In the previous session, FIIs had sold Rs 583 crore, while DIIs bought Rs 3,538 crore.

India's 10-year government bond yield rose 9 basis points last week to 6.8495 per cent, making the bond market another important factor for rate-sensitive sectors.

On the derivatives front, 24,300 remains an immediate resistance area for the Nifty 50, while 24,000 is the key put-supported level. Bank Nifty closed Friday at 57,761.95, up 0.46 per cent, with 58,000 emerging as an important resistance zone and 57,000 acting as a key support reference. India VIX ended around 11.82, indicating relatively contained volatility despite elevated geopolitical risks.

The domestic macro calendar is relatively quiet on Monday, with no major inflation, GDP or industrial production data scheduled. July industrial production data is due on August 28. The August monthly F&O contracts are set to expire on Tuesday, making derivatives activity particularly important during Monday's session.

The earnings backdrop remains supportive, with Nifty 50 companies reporting average profit growth of around 18 per cent in the June quarter, the strongest growth in 10 quarters. However, high crude prices and global bond yields continue to pose risks. The primary market will also remain active, with two mainboard IPOs opening on Monday, potentially absorbing some market liquidity.

Among individual stocks, Aurobindo Pharma could remain in focus after a U.S. FDA inspection at its AuroPeptides facility concluded with one observation related to facility and equipment maintenance, without reported data integrity or GMP concerns.

Federal Bank's board approved foreign currency bonds of up to USD 500 million through its GIFT City banking unit and also reappointed its MD and CEO, improving its funding flexibility. IDFC FIRST Bank received a BBB- rating from S&P for its USD 600 million senior notes, broadly matching its existing issuer rating. NHPC may remain in focus after the final hearing for the NHPC-Jalpower amalgamation was postponed by the Ministry of Corporate Affairs.

JBM Auto clarified that its subsidiary, JBM Electric Vehicles, is evaluating potential fundraising opportunities as part of normal business activity, which could lead to stock-specific volatility. Power Grid Corporation emerged as the successful bidder for a Gujarat renewable energy transmission project with a discovered tariff of Rs 822.91 crore per annum, providing a positive trigger for its transmission business.

Natco Pharma could see stock-specific action after a U.S. FDA inspection at its Visakhapatnam facility concluded with four observations. Paradeep Phosphates may remain under pressure after Goa Customs ordered the confiscation of seven urea consignments and imposed penalties totalling Rs 93.59 crore.

Oil-consuming sectors, including aviation, paints and chemicals, will remain sensitive to movements in Brent crude, which continues to trade near USD 93 per barrel despite Monday's decline. Banks and financials will also be in focus, with Bank Nifty approaching the key 58,000 resistance level. Bond yields, foreign investor flows and overall risk sentiment could determine the sector's near-term direction.

Pharma stocks may witness stock-specific volatility following regulatory developments at Aurobindo Pharma and Natco Pharma.

Overall, GIFT Nifty points to a mildly positive start for the Indian stock market, but the broader trend will depend on crude oil prices, developments surrounding U.S. sanctions on Iran, Treasury yields, foreign flows and derivatives positioning. While Friday's recovery and strong corporate earnings provide some support, geopolitical risks and elevated energy prices are likely to keep market sentiment cautious.

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

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