Indian Markets Face Flat Opening Amid Crude Oil Pressures and US Fed Focus

Indian shares are expected to open little changed on Monday as sentiment remains subdued over elevated crude oil prices and their impact on inflation. Investors are also maintaining a cautious stance ahead of the US Federal Reserve's upcoming policy decision later this week.

GIFT Nifty futures were trading at 22,608 at 7:46 a.m. IST, indicating a muted start for the benchmark Nifty 50, which closed at 22,600 on Friday. Last week, both the Nifty 50 and the BSE Sensex fell by 2.4% and 2.2% respectively, declining across all four trading sessions due to surging oil prices and tensions in the Middle East.

Brent crude futures traded around $115 a barrel, easing slightly from a near six-month high of $117 recorded after the Indian market closed on Friday. However, ongoing supply concerns remain in focus following attacks on Saudi Arabia. Meanwhile, broader Asian markets also felt the pressure, with MSCI’s broadest index of Asia-Pacific shares outside Japan easing 0.3%.

On the macroeconomic front, nearly all economists polled by Reuters expect the US Federal Reserve to skip raising interest rates this week while signaling a potential hike in December. Policymakers continue to signal patience even as inflationary pressures persist. Higher US interest rates typically reduce the attractiveness of emerging market equities like India for foreign investors, as the US dollar and Treasuries gain favour.

Despite these macro headwinds, provisional data shows that foreign investors bought Indian shares worth 8.9 billion rupees ($93.74 million) on Friday, marking them as net buyers in three of the last five trading sessions.

In corporate developments, several major Indian firms released notable updates. IT major Infosys cut its annual revenue growth forecast as weakness in the key North American market deepened, highlighting how artificial intelligence is disrupting the traditional IT services industry. Conversely, Kotak Mahindra Bank reported a higher-than-expected quarterly profit, supported by stronger loan demand and lower provisions for bad loans. Additionally, drugmaker Dr Reddy’s Laboratories posted a better-than-expected quarterly profit, as domestic demand helped cushion a slowdown in its key US market.

"The current market sentiment reflects a cautious approach among investors as they balance global macroeconomic headwinds, particularly crude oil volatility and US monetary policy, against domestic corporate earnings. While IT majors like Infosys navigate structural shifts such as AI disruption, sectors driven by domestic demand continue to show resilience. For businesses and investors in the ecosystem, maintaining agility and focusing on core fundamentals will be crucial as external variables continue to dictate short-term market direction." — Dr. Shishir Gupta, Founder & CEO, StartupLanes