Indian benchmark indices opened marginally lower on Thursday, September 10, amid weak global cues as the intensifying Middle East conflict continued to keep crude oil prices above the $100-a-barrel mark. Elevated oil prices have raised concerns over inflation, the rupee and corporate margins in India, a major crude importer.
At around 9:25 AM, the Sensex stood at 74,734.50, down 29.73 points or 0.04 per cent. The Nifty 50 was at 23,421.65, lower by 9.85 points or 0.04 per cent.
At the time of reporting, Brent Crude stood at USD 101.02 per barrel (-0.18 per cent), whereas Crude Oil edged up slightly by $0.05 (+0.05 per cent) to $96.10. At the same time, Gold posted modest gains, advancing by $9.65 (+0.22 per cent) to reach $4,407.80.
V K Vijayakumar, Chief Investment Strategist, Geojit Investments, noted, “With Nifty dipping below the 23500 resistance, the market construct has turned weak. Technically the market is vulnerable to further correction, and the fundamental macro trends continue to deteriorate. Brent crude has spiked above $101 and the U.S. 10-year yield has moved up to 4.83 per cent. Probability of a Fed rate hike this month has increased and this is also contributing to the concerns in the market.”
“The geopolitical tensions in the Middle East is deteriorating and the market is giving no heed to Trump’s tall talk that “ the war will end immediately after the election ( US mid-term). Even though India’s forex reserves are comfortable and the current account deficit is under control, if crude remains above $ 100 for an extended period of time, it will impact India’s GDP growth this year with its fallout on corporate earnings too.”
“The sectors that are likely to be impacted are energy sensitive sectors like aviation, paints, adhesives, tyres and chemicals. In such an environment defensives like FMCG and sectors with inelastic demand like pharmaceuticals and healthcare will remain resilient. Growth sectors like digital platform companies continue to be on strong footing. Even though banking stocks, particularly the large private sector players, are technically weak, they are fundamentally strong. The risk-reward ratio in this segment favours reward, for long-term investors.”