Indian equities are set to enter Friday’s session hoping for a relief rally after the sharp sell-off in the previous session, but the global backdrop remains fragile. Crude oil continues to trade at elevated levels, bond yields remain high and diplomatic efforts over tensions in West Asia have yet to produce a clear breakthrough.
GIFT Nifty indicated a positive start for the domestic market. The index had closed at 23,100 on Thursday night and moved up to around 23,156 in early trade before giving up part of the gains.
Meanwhile, the Securities and Exchange Board of India has announced two significant regulatory changes. Foreign investors will now be allowed to participate in derivatives trading in non-agricultural commodities, addressing a long-standing demand from the market.
Sebi has also allowed portfolio management services, or PMS providers, to invest in overseas equities, debt securities and mutual funds. Investments in unlisted debt securities will also be permitted.
Diplomatic activity involving the US and Iran continued on the sidelines of the UN meetings. Iranian President Masoud Pezeshkian has indicated that Tehran is open to reaching an agreement with Washington. Iran has proposed reopening the Strait of Hormuz in exchange for the lifting of the US naval blockade, though no formal agreement has been confirmed.
Chinese President Xi Jinping has also called for dialogue during discussions with US President Donald Trump. Talks between the two leaders are expected to continue, with trade tensions among the major issues under discussion.
Brent crude, which had surged as high as $108.8 a barrel, eased amid continuing diplomatic efforts and later moved towards the $106 level.
Global bond markets remain under pressure, with yields in the US and several other economies moving sharply higher.
The US two-year Treasury yield climbed to around 4.92%, while the 10-year yield touched 5.225% and the 30-year yield rose to 5.502% before easing slightly.
Higher bond yields raise borrowing costs for governments as well as companies, increasing concerns over tighter financial conditions.
The US government has announced plans to buy back $6 billion worth of bonds, but the move has so far failed to significantly reverse the decline in bond prices.
US 30-year mortgage rates have also risen to 7.45%, the highest level since 2024.
Persistent weakness in bond markets could spill over into equities and currencies while increasing the risk of a broader slowdown.
US markets ended Thursday on a subdued note as investors weighed higher crude prices and renewed concerns over interest rates.
Market expectations of another US Federal Reserve rate hike in October have increased, while diesel prices have also moved sharply higher.
The Dow Jones Industrial Average fell 161.61 points, or 0.31%, to 51,349.98.
The S&P 500 slipped 1.90 points, or 0.02%, to 7,704.13.
The Nasdaq Composite managed a marginal gain of 3.34 points, or 0.01%, to close at 26,939.37.
US equity futures were mixed in early trade.
Several Asian markets are closed for holidays.
Japan’s Nikkei gained around 1.20%, while Hong Kong’s Hang Seng fell about 1.85%. Australia’s benchmark index was down around 0.60%.
European markets had also ended lower on Thursday, weighed by rising energy costs and weakness in bond markets.
Indian equities suffered a sharp fall on Thursday as three major concerns converged — rising crude oil prices, higher interest-rate expectations and proposed changes to insurance distribution commissions.
The Insurance Regulatory and Development Authority of India has proposed reforms that could reduce commissions paid to insurance distributors.
The proposals triggered concerns over the earnings of banks, NBFCs and insurance distribution platforms that generate substantial fee income from insurance sales.
Banking and financial stocks came under heavy pressure. The Bank Nifty fell 1.96%, while the broader financial services index dropped 2.39%.
Shares of insurance distribution and fintech companies also saw sharp losses.
The broader market weakness also overshadowed the stock market debut of the National Stock Exchange. NSE shares, issued at ₹1,785 apiece, listed at ₹1,800 and rose to an intraday high of ₹1,878 before closing at ₹1,818.
Macquarie has reportedly set a target price of ₹1,950 for NSE shares, while Emkay Global has a target of ₹2,030.
The sell-off was broad-based. On the BSE, 1,362 stocks advanced while 3,013 declined. On the NSE, 931 stocks gained while 2,571 ended lower.
Foreign portfolio investors turned aggressive sellers, recording net cash-market sales of ₹5,027.36 crore on Thursday.
Domestic institutional investors partly offset the outflow with net purchases of ₹4,301.18 crore.
The Sensex fell 1,247.71 points, or 1.67%, to close at 73,580.54. The Nifty 50 declined 383.70 points, or 1.64%, to 23,063.10. Bank Nifty dropped 1,110.40 points, or 1.96%, to 55,438.50. The Nifty Midcap 100 lost 2.25%, while the Smallcap 100 fell 1.53%.
Gold remained volatile as expectations of higher interest rates weighed on the precious metal.
International gold prices fell $12.60, or 0.29%, to close around $4,275 an ounce on Thursday. Prices recovered to around $4,288 in early Friday trade.
In Kerala, 22-carat gold fell ₹1,120 per sovereign on Thursday to ₹1,11,960.
Silver declined about 1% to $63.97 an ounce before recovering marginally. Platinum was around $1,753 an ounce, palladium at $1,244 and rhodium around $9,000.
Rubber prices continued their upward movement both internationally and in Kerala. In Bangkok, RSS-1 was quoted at around $287.05 per quintal and RSS-3 at $283.60. In Kerala, RSS-4 moved up to around ₹27,550 per quintal.
Industrial metals moved in different directions. Copper rose 0.20% to $14,763.85 a tonne, while aluminium slipped 0.22% to $3,252.10.
Lead and zinc advanced, while nickel and tin declined.
Cocoa prices rose 1.12% to $5,590 a tonne amid concerns that dry weather in parts of Ivory Coast could affect production.
Arabica coffee slipped 0.20% to $2.754 a pound. Palm oil was around 4,772 Malaysian ringgit a tonne. India has reduced import duties on palm oil, soybean oil and sunflower oil in an effort to contain food inflation.
The US Dollar Index closed Thursday at 101.29 and eased marginally to around 101.23 in early trade. The euro weakened to around $1.1377, while the pound slipped to $1.3215.
The Japanese yen weakened to around 158.85 against the dollar, while the Chinese yuan remained around 6.71 per dollar. The US 10-year Treasury yield remained elevated at around 5.18%.
The rupee weakened further on Thursday, with the dollar gaining 22 paise to close at ₹95.96. In the offshore forward market, the dollar briefly moved above ₹96 before easing.
The Chinese yuan strengthened to around ₹14.30, while the euro moved up to about ₹109.16.
Crude oil prices remain one of the biggest risks for Indian equities. Brent crude had surged to $108.8 a barrel before closing near $106.8. It eased to around $105.7 in early Friday trade. WTI crude was trading around $93.3 a barrel.
With India heavily dependent on imported crude, persistently high oil prices could add pressure on inflation, the rupee and corporate margins.
Cryptocurrencies traded mixed. Bitcoin was above $84,400 in early trade, while Ether traded above $2,680 and Solana above $117.
Sensex: 73,580.54, down 1.67%
Nifty 50: 23,063.10, down 1.64%
Bank Nifty: 55,438.50, down 1.96%
Nifty Midcap 100: 60,990.15, down 2.25%
Nifty Smallcap 100: 19,684.75, down 1.53%
Dow Jones: 51,349.98, down 0.31%
S&P 500: 7,704.13, down 0.02%
Nasdaq: 26,939.37, up 0.01%
US dollar: ₹95.96, up ₹0.22
Gold: $4,275.40 an ounce, down $12.60
Kerala gold: ₹1,11,960 per sovereign, down ₹1,120