GIFT Nifty Slips as Geopolitical Risks Weigh on Indian Markets Despite US Inflation Relief and Global Rallies

GIFT Nifty Slips as Geopolitical Risks Weigh on Indian Markets Despite US Inflation Relief and Global Rallies​

Indian stock markets are set for a challenging opening session, with domestic benchmarks expected to start subdued despite supportive global cues. The preliminary reading from GIFT Nifty indicates potential weakness ahead for the Nifty 50. This caution persists even as Asian equities rallied and Wall Street saw positive movement, keeping underlying concerns around geopolitical instability high.

Domestic Market Woes Amid Two Days of Losses​

The domestic market is due to open after two consecutive days of declines. On Wednesday's trading session, the Sensex fell by 187.9 points, equating to a 0.24 percent loss, settling at 77,966.35. The Nifty also experienced a dip, dropping 35.75 points (0.15 percent) to close at 24,435.95.

Sentiment in the domestic market was negatively impacted by concentrated selling in Tata Group stocks following N Chandrasekaran's decision to step down as Tata Sons chairman. This institutional movement contributed to the overall downward trend preceding Thursday’s session.

Global Cues Offer Limited Comfort to Indian Equities​

While Asian markets demonstrated strength and US equities posted gains, GIFT Nifty is currently trading at 24,433, down 38 points (0.15 percent), signaling a mildly negative open for the Nifty 50. The market context remains guarded due to persistent geopolitical uncertainties that could outweigh positive economic data.

The positive global trend was partially attributed to US consumer prices rising only 0.1 percent in July, which aligns with expectations and reduces near-term concerns regarding further interest rate hikes by the Federal Reserve.

Asian Equities Rally as US Inflation Data Normalizes Expectations​

Asia Pacific markets showed broad strength after the release of the US inflation data. MSCI's broadest index for Asia outside Japan gained 0.97 percent. South Korea's Kospi surged notably at 4.4 percent, and Japan’s Nikkei 225 advanced by 1.86 percent.

In tandem with these regional gains, US equity futures were stable in Asian trade. The S&P 500 gained 0.26 percent to 7,748.5, while the Nasdaq Composite rose by 0.54 percent, reaching 26,588.49. The Dow Jones Industrial Average saw a marginal slip of 0.04 percent.

Crude Oil Retreats Amid Geopolitical Risk in the Middle East​

A potential relief for Indian markets comes as crude oil prices experienced sharp declines on Thursday. Brent crude futures dropped by 1.5 percent to $87.69 a barrel. US West Texas Intermediate crude fell 1.6 percent, settling at $81.97.

This decline followed downward revisions in global oil demand projections for 2026. However, the necessary relief is tempered by the ongoing deadlock between Washington and Tehran regarding Gulf conflict negotiations, keeping concerns over Middle East supply disruptions alive.

Institutional Flows Show Divergence as FIIs Sell Off​

Institutional activity in the previous session presented a contrasting picture of flows. Foreign institutional investors (FIIs) recorded a net sell, offloading Indian equities worth Rs 1,000 crore for the first time after three consecutive sessions of purchases.

In contrast, domestic institutional investors (DIIs) significantly stepped up their buying activity. DIIs purchased equities worth Rs 5,841 crore, providing a notable cushion against the selling pressure exerted by international investors.