Asian markets were trading mixed on Tuesday after US equities closed lower in the previous session. The Indian market, reopening after a one-day holiday, is showing signs of a positive start, with GIFT Nifty trading higher.
Global markets remain focused on interest rates. The US Federal Reserve is widely expected to raise rates on Wednesday, while the Bank of England and Bank of Japan are also expected to tighten policy on Thursday.
Higher-than-expected Indian retail inflation has meanwhile revived expectations of a possible repo rate hike by the Reserve Bank of India in October.
Crude oil has again moved up to around $107 a barrel, adding to inflation and economic growth concerns.
GIFT Nifty closed Monday's derivatives session at 23,500 and rose to 23,550 in morning trade, pointing to a potentially positive opening for Indian equities.
Investors will also track Tata Sons after the Reserve Bank of India rejected its application to deregister as a core investment company. A potential listing of Tata Sons could increase the market value and index weight of several Tata Group companies.
Potential beneficiaries include:
Tata Steel
Tata Motors PV
Tata Chemicals
Tata Consumer Products
Indian Hotels
The group's next legal move over the listing requirement is expected to become clearer on Thursday.
After chairman OP Bhatt, independent director DK Singh has also resigned from the Coforge board.
The GST Appellate Commissioner has upheld a demand against HDFC Life Insurance relating to GST for 2017-22. The company faces a tax demand of ₹942 crore and a penalty, including interest, of ₹2,423 crore.
India's retail and wholesale inflation both accelerated in August.
Retail inflation rose to 4.82 per cent from 4.45 per cent in July, while wholesale inflation increased to 9.92 per cent from 9.78 per cent.
The combination of higher global crude prices and the potential impact of El Niño on agricultural output could put further pressure on inflation in the coming months.
The Reserve Bank's inflation projection for 2026-27, currently around 5 per cent, may therefore need to be revised upwards.
SBI Research had earlier projected retail inflation to rise to around 6 per cent in October and November before easing towards 5 per cent by January. With crude oil again above $100, it now sees inflation potentially rising to 6.5 per cent.
The RBI's formal inflation target is 4 per cent.
SBI Research has recommended two 25-basis-point rate hikes, one each in October and December, to contain rising inflation.
There has also been speculation that the issue of interest rates may have figured in RBI Governor Sanjay Malhotra's meeting with Finance Minister Nirmala Sitharaman.
Food inflation rose to 5.95 per cent in August, with vegetables accounting for a significant part of the increase. Rising wholesale inflation also points to continuing pressure on consumer prices in the months ahead.
The surge in crude prices is creating another problem for India. India had previously benefited from discounts on some crude imports, but it is now paying up to 15 per cent more. When global crude is priced at $100 a barrel, the effective cost for India can be $115 or more.
This raises the question of whether the government and oil marketing companies can continue absorbing the higher cost without raising retail petrol and diesel prices.
Higher fuel prices would feed directly into inflation. Oil companies have so far absorbed a large part of the increase in crude costs, but that may become increasingly difficult if prices remain elevated.
The disruption of refineries in Russia and West Asia due to the ongoing conflicts has also altered global fuel flows, with countries such as Russia and Iran becoming buyers of petrol and diesel. Fuel prices have consequently risen across markets. Diesel prices in the US have crossed $6 a gallon.
The central government has amended rules to allow banks to levy a merchant discount rate (MDR) on UPI transactions above ₹2,000.
Individual banks will determine the rate. Banks will receive 40 per cent of the fee.
US equities fell on Monday as crude oil moved above $108 a barrel and investors assessed the possibility of a Federal Reserve rate hike on Wednesday.
Higher US retail inflation data released on Friday strengthened expectations of monetary tightening.
Concerns over the potential risks posed by rapidly advancing artificial intelligence also weighed on technology stocks and pushed the Nasdaq down sharply at the start of trading. The market subsequently recovered part of its losses as crude prices eased from their early highs.
The probability of a Fed rate hike rose to 85.5 per cent. The yield on US 10-year Treasury bonds moved towards 5 per cent.
At Monday's close:
Dow Jones: 52,421.20, down 0.29 per cent
S&P 500: 7,619.98, down 0.46 per cent
Nasdaq Composite: 26,186.41, down 0.56 per cent
US stock futures were little changed, with no clear direction.
Dow futures: down 52 points, or 0.10 per cent
S&P 500 futures: down 3.5 points, or 0.05 per cent
Nasdaq futures: down 10 points, or 0.04 per cent
Indian stocks showed mixed moves in the US ADR market.
HDFC Bank fell 1.93 per cent during regular trading but recovered 0.66 per cent in after-hours trading to close at $23.04.
ICICI Bank declined 0.44 per cent during regular trading and ended unchanged in extended trading at $29.26.
Infosys jumped 4.79 per cent during regular trading and gained another 0.20 per cent after hours to close at $11.62.
Wipro rose 5.33 per cent during regular trading but slipped 0.56 per cent in extended trading to $1.77.
European equities were broadly lower, with the FTSE being an exception. Higher crude prices and concerns over AI weighed on the market, particularly semiconductor and energy stocks.
Asian markets were trading in different directions in Tuesday morning trade.
Japan's Nikkei: up 0.70 per cent
Australia's market: down 0.65 per cent
South Korea's Kospi: up 0.15 per cent
Hong Kong's Hang Seng: down 0.40 per cent
Taiwan index: down 0.25 per cent
Shanghai Composite: down 0.35 per cent
Indian equities had ended lower on Friday before the market holiday on Monday.
Foreign investors, who were net buyers in July and August, turned sellers during the first half of September. They withdrew ₹13,138 crore from Indian equities during the first two weeks of the month.
Friday's close:
Sensex: 74,781.76, down 120.83 points or 0.16 per cent
Nifty 50: 23,398.10, down 79.70 points or 0.34 per cent
Bank Nifty: 56,606.55, up 134.60 points or 0.24 per cent
Mid Cap 100: 62,197.20, down 160.15 points or 0.26 per cent
Small Cap 100: 19,906.30, down 115.65 points or 0.58 per cent
Cochin Shipyard plunged around 10 per cent on Friday after the company signalled caution over its future business prospects.
SEBI has proposed changes to the controversial closing auction session (CAS) mechanism.
A consultation paper released on Saturday has proposed several options, including changes to the timing of the CAS and the methodology used for derivatives pricing.
One proposal is to introduce CAS-based pricing only after a one-year transition period.
The existing difference between the cash market closing price and the CAS price has been a concern for investors. The proposed changes could bring greater clarity to exchanges and brokers while reducing potential pricing distortions.
Gold extended its decline as expectations of higher US interest rates increased.
Investors are watching whether prices could again fall below $4,000 an ounce, as happened in July. The next major trigger will be the US Federal Reserve's decision on Wednesday.
Gold fell $49.50, or 1.14 per cent, on Monday to close at $4,300.20 an ounce. It slipped to $4,293 in morning trade before recovering to around $4,310.
In Keralam, 22-carat gold fell ₹1,160 per sovereign on Monday to ₹1,12,080.
Silver declined around 2 per cent to $63.37 an ounce. It was largely unchanged in morning trade.
Other precious metals:
Platinum: $1,751
Palladium: $1,269
Rhodium: $9,200
International rubber prices declined again on Monday.
RSS 1 in Bangkok fell to $283.30 a quintal, while RSS 3 was at $279.90. The Keralam price remained at ₹27,400 a quintal.
A stronger El Niño could significantly reduce rubber production in Southeast Asia.
The Association of Natural Rubber Producing Countries had earlier projected global rubber production at 15.28 million tonnes in 2026, against consumption of 15.36 million tonnes.
Meanwhile, elevated crude prices are adding to concerns over global economic growth.
Industrial metals extended their decline on Monday amid concerns over higher interest rates.
Copper fell 1.37 per cent to $14,043.85 a tonne, while aluminium declined 0.37 per cent to $3,244.03.
Lead, nickel, zinc and tin fell by up to 2.98 per cent.
Cocoa rose 1.04 per cent to $6,023 a tonne.
Recent price weakness had been linked to a 19 per cent increase in Ivory Coast exports last month and inventories on the ICE exchange reaching a two-year high.
However, production is expected to fall sharply in the 2026-27 season beginning in October. Ivory Coast output is projected to decline 20 per cent and Ghana's production by 38 per cent.
Arabica coffee rose 0.76 per cent to $2.89 a pound. Brazil's production is expected to reach a record level, while its August exports rose 45 per cent.
Palm oil gained 0.75 per cent to 4,850 Malaysian ringgit a tonne.
The US dollar index strengthened sharply on Monday, closing at 99.39 and rising further to 99.55 in morning trade.
The euro slipped to $1.1583 and the pound to $1.351. The Japanese yen stood at 154.70 to the dollar, while the Chinese yuan remained at 6.71 per dollar.
The US 10-year Treasury yield rose as high as 5.014 per cent before easing to around 5 per cent.
The rupee weakened further on Friday, with the dollar gaining 11 paise to close at ₹95.55.
In the overseas forward market, the dollar rose to ₹95.88 in morning trade, pointing to further pressure on the rupee.
The Chinese yuan strengthened to ₹14.25, while the euro eased to ₹110.32.
Brent crude rose above $108 a barrel on Monday before giving up some gains. It resumed its upward move in Tuesday morning trade.
Brent gained 1.35 per cent on Monday to close at $105.68 a barrel and subsequently rose to $107.02.
WTI crude was trading at $102.81.
For India, sustained crude prices above $100 remain a major risk because of their potential impact on inflation, the rupee, the fiscal position and corporate costs.
Major cryptocurrencies were trading higher in morning trade.
Bitcoin rose above $77,960, while Ether crossed $2,515 and Solana moved above $102.
Sensex — 74,781.76
Nifty 50 — 23,398.10
Bank Nifty — 56,606.55
Mid Cap 100 — 62,197.20
Small Cap 100 — 19,906.30
Dow Jones — 52,421.20 | -0.29 per cent
S&P 500 — 7,619.98 | -0.46 per cent
Nasdaq — 26,186.42 | -0.56 per cent
US dollar — ₹95.55
Gold — $4,300.20 an ounce | -$49.50
Gold — ₹1,12,080 per sovereign | -₹1,160
Brent crude — $105.68 | +1.07 per cent