GIFT Nifty Indicates Cautious Start for Indian Markets Amid Asian Weakness

Indian benchmark indices, including Sensex and Nifty, are expected to open cautiously on Monday, with GIFT Nifty suggesting a modest positive start after two days of gains. As of 7:45 AM, GIFT Nifty was trading at 23,130, reflecting an increase of 35 points or 0.15 percent. This cautious optimism comes amidst a backdrop of weakness in Asian markets, particularly following a sharp selloff in US technology stocks and ongoing concerns regarding investments in artificial intelligence.

The previous trading session saw Indian equities close higher, with the Sensex rising by 413.66 points to reach 74,729.27, and the Nifty advancing by 148.80 points to 23,146.15. Notably, foreign institutional investors turned net buyers after a prolonged period of selling, acquiring equities worth approximately Rs 1,166 crore. In contrast, domestic institutional investors ended their 45-session buying streak, selling shares valued at Rs 3,661 crore.

Asian markets opened lower on Monday, although some losses were recovered later. The MSCI Asia Index dropped by 0.5 percent, while South Korea's Kospi managed a slight gain of 0.2 percent after initial declines. Japan's Nikkei 225 futures fell by 1.3 percent, and Hong Kong's Hang Seng futures decreased by 0.2 percent. The decline in technology stocks was largely attributed to concerns about the substantial funding needed for artificial intelligence projects, coinciding with a busy earnings week ahead.

In the US, equity futures showed signs of recovery after a significant selloff on Friday, with S&P 500 futures rising by 0.5 percent and Nasdaq 100 futures increasing by 1 percent. This rebound, coupled with easing oil prices, helped mitigate losses in Asian markets. On Friday, the Nasdaq Composite saw a sharp decline of 2.19 percent, the steepest among major indices, while the S&P 500 and Dow Jones Industrial Average also fell by 1.22 percent and 0.55 percent, respectively.

Crude oil prices experienced a decline on Monday, retreating from a five-month high as traders assessed geopolitical tensions in the Middle East against stable regional supplies. Brent crude fell by 1.5 percent to $108.27 per barrel, while West Texas Intermediate dropped by 0.6 percent to $100.83 per barrel. Ponmudi R, CEO of Enrich Money, highlighted that persistent high crude prices and geopolitical uncertainties are key macroeconomic risks for Indian equities. He noted that diplomatic progress in the Middle East could alleviate crude prices and enhance market sentiment, while further escalations could lead to increased volatility.