India’s stock benchmarks are set to open higher on Monday, after last week’s worst weekly drop in years confirmed a technical correction, as hopes of easing energy supply worries offered temporary relief to markets rattled by geopolitical tensions.
GIFT Nifty rose to an intraday high of 23,370.00 but soon gave up all the gains to an intraday low of 23,152.00, as compared to the previous close of 23,255.50.
“With uncertainty surrounding the Iran war continuing, the stock market is in unchartered territory,” V.K. Vijayakumar, chief investment strategist at Geojit Investments Ltd., said in an email.
“The sustained heavy selling by FIIs and the weakness in rupee are contributing to the market weakness. In the near-term FIIs are likely to continue selling in the market, particularly when there is a mild rally in the market. This will add to the weakness in the market, even in fundamentally sound sectors and stocks.”
Earlier, sentiment improved after the Wall Street Journal reported that the US is preparing to announce that countries have agreed to form a coalition to escort ships through the Strait of Hormuz—a key chokepoint that handles 20% of global oil supply on a daily basis.
Meanwhile, two India-flagged LPG carriers, Shivalik and Nanda Devi, carrying about 92,712 tonnes of LPG safely crossed the Strait last week en route to India, easing immediate concerns over supply disruptions.
India’s foreign minister Subrahmanyam Jaishankar told the Financial Times in an interview published on Sunday that he was engaged in discussions with Iran and that “talking has yielded some results”.
Still, investors are awaiting clear signs of de-escalation that could provide more durable relief to equities and the Indian rupee.
Oil prices remained above $100 a barrel amid the raging Middle East war, stoking inflation and growth concerns and dragging the rupee to record lows. Since the Iran war broke out at the end of February, Tehran has largely halted traffic through the Strait of Hormuz.
“There are times when doing nothing is a good strategy. This appears to be the case now,” Vijayakumar said. “However, investors with risk appetite can certainly nibble at high-quality stocks across sectors, now available at fair valuations. In the broader market there are growth stocks available at attractive valuations.”
