The Indian stock market is likely to open lower on Tuesday, 8 September. High crude oil prices and weak global cues may keep investors cautious.
Gift Nifty was trading around 23,787.50, down nearly 39 points from the previous close of Nifty futures. This indicates a weak opening for the Nifty and Sensex.
The Nifty 50 fell 0.57 per cent on Monday to close at 23,779. This was its fourth straight session of losses. The Sensex also fell 0.5 per cent to end at 76,132.
Asian markets opened mixed on Tuesday. US markets were closed on Monday for the Labor Day holiday.
Anil Singhvi on crude oil and Iran
Zee Business Managing Editor Anil Singhvi said crude oil will remain one of the biggest factors for the market today. Crude oil prices are trading above $97 a barrel, which is a concern for India because the country depends heavily on crude imports.
However, Singhvi sees some relief on the crude oil front. US President Donald Trump has said that crude oil prices could fall sharply after the war ends. Trump also said Iran would not be able to acquire nuclear weapons.
Singhvi said developments between Iran and Oman will also be important. Talks between the two countries on the movement of ships through the Strait of Hormuz are close to a deal. The discussions are in the final stage and could allow ships to move safely through the route. Iran is expected to have control over the new shipping route.
Any positive development on the Strait of Hormuz could help ease concerns around oil supply and shipping.
Aramco refinery attack adds to oil worries
Singhvi also highlighted the attack on Saudi Aramco’s Jizan oil refinery by Houthi rebels. The refinery has a capacity of around 4 lakh barrels per day.
Any further escalation in the region could push crude oil prices higher. This could add pressure on India’s import bill and inflation and may weigh on the stock market.
FII flows remain a concern
Singhvi said foreign institutional investor flows are another concern for the market. FII buying has slowed and there are signs that selling could increase.
At the same time, domestic institutional investors, or DIIs, continue to buy Indian equities. Their buying is providing some support to the market and is helping offset some of the pressure from foreign investors.
Singhvi also pointed out that a busy IPO market could put pressure on liquidity. Investors may move some money from the secondary market into new issues, which could affect stock market liquidity in the near term.
Mid- and small-caps remain stronger
Despite the weakness in the benchmark indices, Singhvi said there are no clear signs of weakness in mid- and small-cap stocks. This remains a positive sign for the broader market.
He also said India’s economic data remains strong. Strong domestic economic numbers provide a support to the market even as global factors remain uncertain.
The put-call ratio, or PCR, is at 0.69. Singhvi said the market is now close to an oversold zone. This means the recent selling could be followed by some recovery if the selling pressure starts to ease.
