Indian shares eye muted start as oil climbs on intensifying Mideast tensions
- GIFT Nifty futures were at 23,652.5 points
Indian shares are expected to open flat amid escalating Middle East tensions driving Brent crude towards $100, threatening India's economy and prompting foreign investor sell-offs.
- Escalating Middle East tensions and rising Brent crude prices.
- Impact of higher oil on India's trade deficit and inflation.
- Foreign investor sell-offs and upcoming US Fed rate decisions.
Indian shares were likely to open little changed on Wednesday as sentiment remained subdued amid fresh escalation in tensions in the Middle East and a resulting spike in Brent crude toward $100 per barrel.
The Middle East war intensified on Tuesday with Houthis in Yemen launching strikes on several Saudi cities, further embroiling a US ally in the conflict, while US forces hit multiple Iranian oil tankers and Iran struck a US base in Jordan.
Brent crude futures jumped 1.5% to $99.5 per barrel.
Higher oil prices threaten to widen the trade deficit, fuel inflation, and weigh on growth in India, which imports most of its energy needs.
GIFT Nifty futures were at 23,652.5 points as of 7:46 a.m. IST, indicating a muted start for the Nifty 50 index, which closed at 23,635.1 on Tuesday.
The 50-stock index and BSE Sensex have lost 2.2% each over the past seven sessions, closing lower in six of them. They closed at their lowest levels since June 12 on Tuesday.
Investors globally remain focused on US inflation data expected later this week, a key factor in determining the Federal Reserve’s rate action next week.
Higher US interest rates are negative for emerging market equities, as they could slow foreign flows while the dollar and Treasuries become more attractive under tighter monetary policy.
Foreign investors net sold Indian shares worth 1.23 billion rupees ($12.97 million) on Tuesday, as per provisional data. They have offloaded $1.33 billion worth of shares so far in September.
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