Fresh geopolitical tensions in West Asia continued to dominate global markets on Tuesday, although hopes of renewed US-Iran talks lifted most Asian equities. Oil prices climbed further, gold remained above the $4,000-an-ounce mark despite recent volatility, while the Indian rupee is expected to remain under pressure.
Gift Nifty traded below Monday's close, signalling a weak start for Indian equities. Gift Nifty, which ended Monday's session at 24,071 in Gift City, slipped below 24,015 in early Tuesday trade, indicating a negative opening for the domestic market.
The geopolitical crisis deepened after US President Donald Trump announced that the US would assume control of security in the Strait of Hormuz and proposed a 20 percent security fee for commercial shipping. Washington also declared a naval blockade of Iranian ports, although details of the proposed shipping levy remain unclear.
Iran dismissed the announcements, while shipping movement through the Strait of Hormuz was reportedly disrupted. Overnight, the US carried out fresh air strikes in Iran, which retaliated with attacks reaching a US military base in Jordan. Iran also targeted two UAE oil tankers. Houthi fighters attempted attacks on merchant vessels near the Bab el-Mandeb Strait, prompting Saudi military action, while fighting intensified in Yemen.
India's retail inflation rose to 4.38 percent in June, the highest in 17 months, compared with 3.93 percent in May.
Food inflation accelerated to 5.3 percent, while transport costs rose 7.4 percent. Economists expect inflation to remain above 5 percent during the current financial year, though the Reserve Bank of India is still widely expected to keep the repo rate unchanged at its August monetary policy meeting.
India's merchandise trade deficit widened to a four-year high of $30.4 billion in June as imports surged.
Imports jumped 31 percent to $70.8 billion, led by a 40 percent rise in crude oil imports to $19.3 billion. Fertiliser imports tripled to $2.3 billion, while gold imports increased 7 percent to $2 billion. Silver imports, however, plunged 74 percent to $60 million.
Exports rose 15.4 percent to $40.4 billion.
The India Meteorological Department said the southwest monsoon rainfall deficit widened to 19.4 percent as of July 13 after narrowing earlier this month.
Kerala's rainfall deficit increased to 29 percent.
Improved rainfall has provided some relief, but kharif sowing remains 16 percent below last year's level as of July 10.
Paddy cultivation is down 8.6 percent, while pulses, oilseeds, coarse cereals and cotton continue to trail last year's pace.
US stocks ended sharply lower on Monday as investors reacted to escalating tensions in West Asia and rising crude oil prices.
The Dow Jones fell 138.37 points (0.26 percent) to 52,498.64. The S&P 500 declined 60.05 points (0.79 percent) to 7,515.34, while the Nasdaq Composite dropped 408.43 points (1.55 percent) to 25,873.18.
South Korean chipmaker SK Hynix's ADR slumped 15.4 percent after Friday's listing rally. SpaceX shares fell another 4.24 percent to $139.14.
US futures traded in mixed territory on Tuesday morning. Dow futures were down 102 points, S&P 500 futures slipped five points, while Nasdaq futures gained 42 points.
Among Indian ADRs, HDFC Bank edged lower in after-hours trading. ICICI Bank extended gains, Infosys surrendered part of its earlier rally, while Wipro closed slightly higher.
European markets ended with modest gains after the UK and Switzerland reached a significant agreement covering services trade.
Most major Asian markets traded higher on Tuesday.
South Korea's Kospi gained around 2 percent, Japan's Nikkei rose 0.22 percent, while Australia's benchmark slipped 0.20 percent. Hong Kong's Hang Seng lost about 1 percent and Shanghai declined 0.24 percent.
Indian equities recovered strongly from sharp early losses on Monday to end almost unchanged despite soaring crude prices and weakness in global markets.
The Sensex rebounded nearly 760 points from the day's low, while the Nifty recovered more than 210 points. Strong first-quarter earnings from IT companies lifted the Nifty IT index by nearly 4 percent.
Foreign institutional investors remained net sellers, offloading ₹3,062.27 crore in the cash market, while domestic institutional investors purchased shares worth ₹2,171.70 crore.
Kalyan Jewellers surged 7.4 percent, taking its one-week gain to 42 percent. Federal Bank touched a record high of ₹336.50.
HCL Technologies reported better-than-expected first-quarter earnings, with revenue rising 14 percent and net profit increasing 20.3 percent.
Bharat Electronics secured fresh orders worth ₹572 crore. Grasim Industries' renewable energy subsidiary acquired Shell India's Spring Energy business for ₹17,200 crore, adding 5 GW to its renewable energy capacity.
ICICI Prudential Life posted a 23.1 percent increase in first-quarter net profit. Tata Capital will acquire Thrissur-based Yogakshemam Loans for ₹93 crore. The company has assets worth ₹708 crore and operates 162 branches.
Gold briefly slipped to $3,985 an ounce on Monday before closing at $4,002.10, down $119.30.
In Kerala, the price of 22-carat gold fell by ₹1,040 to ₹1,04,800 per sovereign and is expected to decline further. Silver dropped 3.75 percent to $57.77 an ounce.
Copper gained 0.82 percent to $13,460.35 per tonne, while aluminium edged lower. Zinc and lead weakened, whereas tin and nickel advanced.
International rubber prices continued to rise. In Kerala, RSS-4 rubber climbed to ₹27,800 per quintal.
Cocoa fell 3.68 percent to $5,842 per tonne as supplies improved. Arabica coffee declined 1.27 percent to $3.30 per pound, although global inventories remain at their lowest level since March 2024.
The US Dollar Index closed at 101.24 and moved above 101.30 in early Tuesday trade.
The euro weakened to 1.1387, the pound slipped to 1.3352, while the Japanese yen fell to 162.32 per dollar. The US 10-year Treasury yield rose to 4.62 percent.
The rupee weakened by 29 paise to 95.62 against the US dollar on Monday, its lowest level in a month. Dealers expect it could weaken beyond 96 if geopolitical tensions persist and crude prices remain elevated.
Brent crude surged about 10 percent on Monday to close at $83.30 a barrel before rising to around $84.50 in early Tuesday trade. WTI crude climbed to $79.50.
Cryptocurrencies continued to weaken amid growing risk aversion.
Bitcoin slipped below $62,450, Ether fell below $1,780 and Solana dropped under $75.
Sensex: 77,616.40 (+0.06%)
Nifty 50: 24,211.00 (+0.02%)
Bank Nifty: 58,131.45 (+0.15%)
Nifty Mid Cap 100: 63,040.95 (+0.01%)
Nifty Small Cap 100: 19,422.95 (+0.03%)
Dow Jones: 52,498.64 (-0.26%)
S&P 500: 7,515.34 (-0.79%)
Nasdaq: 25,873.18 (-1.55%)
US dollar: ₹95.62 (+₹0.29)
Gold (per ounce): $4,002.10 (-$119.30)
Gold (per sovereign): ₹1,04,800 (-₹1,040)
Brent crude: $83.30 (+$7.29)