Nifty Suffers 150-Point Decline, Suggests Weak Opening for Indian Markets Amid Elevated Crude Prices and Global Equity Downturn

India's Benchmark Equity Indices Set to Open Lower on Wednesday

The Indian stock market is expected to experience a weak start on Wednesday, tracking the decline in the GIFT Nifty. The GIFT Nifty was trading at 23,421 in early morning trade, down 143 points or 0.61 percent, indicating a negative opening for the benchmark equity indices.

This negative indication comes after the Indian markets ended marginally lower on Tuesday following a volatile session. While gains in IT, realty, and PSU bank stocks were offset by weakness in private banking and heavyweight counters, the broader market sentiment remained positive, with advances outnumbering declines. The Sensex had declined 114.19 points or 0.15 percent to close at 75,200.85, while the Nifty fell 31.95 points or 0.14 percent to settle at 23,618.

Global market trends also contributed to the negative sentiment. Wall Street indices extended losses for a third straight session on Tuesday amid mounting inflation concerns and elevated Treasury yields. The Nasdaq led declines, falling 0.84 percent, while the S&P 500 lost 0.67 percent and the Dow Jones declined 0.65 percent.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The U.S. 10-year Treasury yield climbed to its highest level in more than a year, amid fears that persistently high inflation could push the US Federal Reserve towards future rate hikes. Investors remained cautious, and the market also remained nervous over the lack of progress in U.S.-Iran peace negotiations and continued disruptions around the Strait of Hormuz.

Asian equities extended losses for a fourth straight session on Wednesday, with MSCI's broadest index of Asia-Pacific shares outside Japan falling 0.7 percent. Japan's Nikkei dropped 1.6 percent, South Korea's KOSPI declined 2 percent, while Hong Kong and Chinese equities also traded lower. European stock futures were also weak, while U.S. futures remained largely flat ahead of key earnings from Nvidia later this week.

Crude oil prices eased slightly on Wednesday but continued to remain elevated above the $110 per barrel mark. Brent crude futures slipped 0.4 percent to $110.83 per barrel, while U.S. WTI crude traded near $103.9 per barrel. Investors remained wary as the Strait of Hormuz continued to remain effectively shut despite renewed negotiations between Washington and Tehran.

The elevated crude prices and currency weakness are likely to remain major concerns for Indian markets. The rupee weakened further on Tuesday to touch a fresh record low near the 96.8 mark against the U.S. dollar amid high oil prices and persistent global uncertainty.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Institutional flows also remained weak, with foreign institutional investors (FIIs) selling equities worth Rs 2,457 crore on Tuesday, while domestic institutional investors (DIIs) purchased shares worth Rs 3,802 crore.

Apart from global cues, investors may also track developments around U.S.-India ties after reports that U.S. Secretary of State Marco Rubio is scheduled to visit India from May 23-26 to discuss energy security and trade.

According to Ponmudi R, CEO of Enrich Money, Indian market sentiment remains fragile and heavily headline-driven amid rising energy prices, rupee weakness, and uncertainty around the Middle East conflict. He added that the Nifty remains in a cautious recovery phase, with 23,500-23,400 acting as key support and 23,700-23,800 emerging as the immediate resistance zone. He also noted that Bank Nifty continues to trade with a mildly weak undertone unless it decisively moves above the 54,300-54,500 range.

Note: The table presents a comparison of market declines and price movements on Tuesday and Wednesday.