The Gulf war has resumed. The US has attacked Iran, and Iran has retaliated. Crude oil has risen above $90 a barrel, while Asian markets and US futures have fallen. The Indian market is also likely to open with significant losses.
US Federal Reserve chair Kevin Warsh’s indication that interest rates may have to be raised pushed bond prices lower. Equities also declined. Gold fell below $4,450 an ounce amid concerns over higher interest rates.
Gift Nifty, which trades in derivatives at GIFT City, fell to 24,211 this morning, indicating that the Indian market is likely to open sharply lower today.
HDFC Bank’s stock will be in focus today. Uncertainty surrounding the bank eased somewhat over the weekend. CEO and managing director Sashidhar Jagdishan has decided not to continue in the position. The board was not prepared to offer him another full term, while the Reserve Bank of India was also reportedly not keen on his continuation. Jagdishan said he would retire when his current term ends on October 26.
There is speculation that deputy managing director Kaizad Bharucha could be appointed as the new CEO. However, Bharucha may get a term of only two and a half years due to the rule limiting a person’s tenure as a full-time director to 15 years.
HDFC Bank’s board is also exploring the possibility of bringing in former SBI chairman Dinesh Kalra. Questions remain over whether Kalra, who led a much larger bank, would be interested, and whether his experience in the public sector would translate well to the private banking sector.
The new head will have to strengthen systems and governance to prevent a recurrence of several issues that emerged during Jagdishan’s tenure. Reviving the bank’s stock, which is down more than 27 percent this year, will be the new CEO’s first major challenge.
The bank’s share price has fallen 9 percent over the past five years, while the Bank Nifty has gained 60 percent during the same period.
The National Statistical Office (NSO) will release its estimate of GDP growth for the April-June quarter this evening. The broad expectation is growth of 7-7.5 percent, while SBI Research expects 8 percent.
GDP growth was 6.8 percent in the same quarter last year and 7.8 percent in January-March. Although the West Asian war and higher oil prices posed challenges for India, increased exports, higher government spending and healthy consumer demand are believed to have supported growth.
Growth of more than 7 percent is strong, but may not be sufficient for India’s larger ambitions. According to NITI Aayog estimates, India needs to grow at an average rate of 9.25 percent for 21 years to become a developed country by 2047. Growth below 8 percent would be a major setback to that goal.
Federal Reserve chair Kevin Warsh surprised markets on Friday. He said interest rates may have to be raised because inflation remains above the desired level.
As Warsh was nominated by US President Donald Trump, the expectation had been that he would favour lower rates. However, with retail inflation remaining close to 4 percent, the Fed chair may have little choice but to consider a rate hike.
The market is now pricing in a 25-basis-point rate hike at the FOMC meeting scheduled for September 15-16. Another hike could follow by December.
Higher interest rates could push investors from equities into bonds. Gold could also come under pressure. Gold fell 3.2 percent on Friday.
Employment data and factory output figures due this week will be crucial for the market.
Kevin Warsh’s indication at the Jackson Hole Symposium that interest rates may have to be raised weakened the market on Friday. Equities declined.
Nvidia and other major chipmakers also fell.
The Dow Jones Industrial Average fell 9.45 points, or 0.02 percent, to close at 53,559.99 on Friday. The S&P 500 declined 19.23 points, or 0.25 percent, to 7,711.76, while the Nasdaq Composite fell 138.93 points, or 0.52 percent, to 26,402.42.
Despite Friday’s decline, the Dow is up 2.1 percent so far in August, putting it on track for a fifth consecutive monthly gain. The S&P 500 is up 3 percent and the Nasdaq 4 percent so far this month.
US futures are lower today following the resumption of the US-Iran conflict. Dow futures were down 171 points, or 0.32 percent, while S&P 500 futures fell 34 points, or 0.43 percent. Nasdaq futures declined 182 points, or 0.61 percent.
In New York’s ADR market, HDFC Bank rose 2.76 percent during regular trading on Friday but fell 0.26 percent in after-hours trading to close at $23.02. ICICI Bank gained 0.07 percent during regular trading and another 0.13 percent in after-hours trading to close at $29.92.
Infosys rose 1.26 percent during regular trading and a further 1.24 percent in after-hours trading to close at $12.20. Wipro gained 1.11 percent during regular trading and was unchanged in after-hours trading at $1.82.
European equities posted strong gains on Friday, led by automobile companies. BMW, Volkswagen, Mercedes-Benz and Porsche rose more than 3 percent.
German lender Commerzbank and Italy’s UniCredit, which is seeking to acquire it, also gained.
Asian markets are lower today. Japan’s Nikkei fell 2 percent, while Australia’s market gained 0.20 percent. South Korea’s Kospi declined 2.2 percent.
Hong Kong, Taiwan and Shanghai indices are down more than 1 percent. Chinese factory output declined for the second consecutive month.
The Indian market ended lower for the third consecutive week. Three major indices, including the Bank Nifty, posted weekly losses of around 0.50 percent.
Foreign investors have invested ₹30,919 crore in the Indian market so far in August, after buying equities worth ₹20,200 crore in July. This marks a return to buying after four consecutive months of selling.
However, foreign investors made heavy sales on Friday, recording net selling of ₹5,039.80 crore in the cash market. Domestic funds were net buyers to the tune of ₹5,183.93 crore.
The Sensex rose 330.92 points, or 0.43 percent, to close at 77,264.51 on Friday. The Nifty 50 gained 84.80 points, or 0.35 percent, to 24,175.65. The Bank Nifty fell 13.65 points, or 0.02 percent, to 57,496.30.
The Midcap 100 index rose 34.05 points, or 0.05 percent, to 64,069.50, while the Smallcap 100 index gained 39.35 points, or 0.20 percent, to close at 20,080.00.
More stocks advanced in the broader market. On the BSE, 2,308 stocks gained and 2,029 declined. On the NSE, 1,899 stocks rose while 1,555 fell.
The National Company Law Tribunal’s ruling that Zee owner Subhash Chandra could settle a ₹22,006 crore liability by paying ₹6.5 crore became a contentious issue. It emerged that companies linked to Chandra’s associates had agreed to the settlement, while banks had not. The order reportedly contained procedural errors and signs of bias. Banks are expected to appeal.
Gold, which fell 3.18 percent on Friday following expectations of higher interest rates, is fluctuating at lower levels this morning.
Gold fell $146.20 on Friday to close at $4,456.40 an ounce. This morning, it moved between $4,426 and $4,473 before settling around $4,436.
In Keralam, 22-carat gold fell ₹2,120 per sovereign on Saturday to ₹1,16,040.
Silver fell 4.5 percent on Friday to close at $66.50 an ounce and edged lower this morning.
Platinum stood at $1,813, palladium at $1,378 and rhodium at $8,400.
International rubber prices declined again, while prices in Keralam increased.
In Bangkok, RSS 1 fell to $282.60 per quintal and RSS 3 to $279.10. In Keralam, the price rose to ₹27,500 per quintal.
Major industrial metals gained on Friday. Copper rose 0.31 percent to $14,535, while aluminium gained 0.23 percent to $3,242.
Nickel, tin and lead also rose, while zinc declined.
Cocoa prices jumped 7.48 percent to close at $6,634.61 a tonne. Prices had also surged the previous day. This is the highest level since July 9.
Cocoa prices have risen 27.96 percent in one month. Expectations of lower availability during the 2026-27 season are driving the rally. Ivory Coast and Ghana have said they will begin the season a month early, in September. However, there are no indications of a significant increase in arrivals.
Arabica coffee rose 0.89 percent to $3.12 a pound amid concerns that El Niño could reduce production.
Palm oil gained 1.62 percent to 4,894 Malaysian ringgit.
The US Dollar Index rose on Friday to close at 99.70. It fell to 99.61 this morning.
The euro declined to $1.1592 and the pound to $1.3543. The Japanese yen stood at 159.80 to the dollar, while the Chinese yuan weakened to 6.73 per dollar.
The yield on 10-year US Treasury bonds rose to 4.712 percent amid expectations of higher interest rates.
The rupee gained on Friday, with the dollar falling 16 paise to close at ₹95.38.
In the offshore forward market, the dollar was at ₹95.59 this morning, indicating that the rupee could weaken today.
The Chinese yuan rose to ₹14.24, while the euro stood at ₹111.05.
The resumption of the US-Iran war has pushed crude oil prices above $90 a barrel.
Brent crude, which fell to $88.10 on Friday, jumped 2.5 percent this morning to $90.37. WTI crude stood at $85.34.
Cryptocurrencies, which had remained firm over the weekend, declined again. Bitcoin fell below $77,750, while Ether dropped below $2,420 and Solana below $102.
(Friday, August 28)
Sensex 77,264.51 +0.43%
Nifty 50 24,175.65 +0.35%
Bank Nifty 57,496.30 -0.02%
Midcap 100 64,069.50 +0.05%
Smallcap 100 20,080.00 +0.20%
Dow Jones 53,559.99 -0.02%
S&P 500 7,711.76 -0.25%
Nasdaq 26,402.42 -0.52%
Dollar ₹95.38 -₹0.16
Gold (ounce) $4,456.40 -$146.20
Gold (sovereign) ₹1,18,160 +₹360
Saturday ₹1,16,040 -₹2,120
Brent crude $88.10 -1.60%