Sensex and Nifty Brace for Volatility as Geopolitical Tensions Send Crude Oil Prices Rising

Sensex and Nifty Brace for Volatility as Geopolitical Tensions Send Crude Oil Prices Rising​

Indian equity benchmarks are poised to face a cautious opening on July 22, driven by global cues and ongoing geopolitical tensions. The GIFT Nifty is trading lower in early trade at around 24,114.50, signaling a flat to negative start for domestic markets.

Overnight Market Performance: Sensex and Nifty Close Down​

The Indian equity markets ended the previous session in decline, marking the second consecutive day of weakness. The Sensex finished down by 238.41 points or 0.31 percent at 77,470.11. Similarly, the Nifty closed lower by 50.80 points or 0.21 percent at 24,187.70.

During the trading session, the market faced pressure, with the Nifty dipping to an intraday low of 24,135.65. This downward trend was influenced by rising crude oil prices and escalating tensions in the Middle East. However, a strong buying period in the final hour helped the index recover some losses, settling near the 24,200 mark.

Global Equities Rally as Tech Stocks Drive Gains​

Wall Street's major indices closed higher on Tuesday, with Nasdaq leading the gains. A sharp rally in semiconductor shares managed to shift focus away from ongoing Middle East hostilities and tariff disputes.

The Dow Jones Industrial Average rose by 385.38 points or 0.74 percent, reaching 52,224.64. The S&P 500 gained 65.92 points or 0.89 percent, settling at 7,509.20. Meanwhile, the Nasdaq Composite surged by 329.13 points or 1.29 percent to 25,837.21.

Commodities and Currency Outlook​

Gold held a gain as traders monitored potential threats to energy supply routes. These risks could potentially fuel inflation and put pressure on the Federal Reserve to raise interest rates. Meanwhile, crude oil prices ticked higher in early trading Wednesday. This rise intensified fears of further supply disruptions after U.S. forces were reported striking Iranian military targets for the eleventh night straight, coinciding with reports of attacks by Iranian drones from Kuwait.

The Dollar Index remained strong, holding near a one-week high of 101.20. The dollar was noted to be down 0.1% at 163.06 yen against the Japanese currency, though it had previously set a four-decade high against the Yen.

Asian Currencies and Bond Yields​

Asian currencies displayed mixed performance against the US dollar. Gains were seen in the Indonesian Rupiah (up 0.335%), the South Korean Won (0.116%), Chinese Renminbi (0.034%), Japanese Yen (0.031%), and Taiwan Dollar (0.015%).

On the negative side, the Malaysian Ringgit fell most, declining by 0.078%. The Thai Baht (-0.047%), Singapore Dollar (-0.023%), and Philippine Peso (-0.003%) also registered losses.

The yield on 10-year Treasuries rose marginally to 4.63%, while the yield on 2-year Treasuries showed little change at 4.25%.

Fund Flow Dynamics: FIIs Reverse Trend, DIIs Shift to Sellers​

Fund flows witnessed a shift in institutional investor activity. Foreign institutional investors (FIIs) snapped their six-session selling streak by buying Indian equities worth Rs 1,650 crore on July 21.

Conversely, domestic institutional investors (DIIs) ended their nine-session buying streak. DIIs recorded net sales of equity amounting to Rs 656 crore.