Escalating tensions in West Asia triggered a broad risk-off sentiment across global markets on Monday, sending Asian equities sharply lower, lifting crude oil prices close to $80 a barrel, strengthening the US dollar, and pressuring gold prices. Concerns over a widening conflict around the Strait of Hormuz have once again shifted investor focus towards geopolitical risks.
Gift Nifty also pointed to a weak start for Indian equities, while investors await India's June retail inflation data later in the day.
Gift Nifty, which closed at 24,234.50 on Friday night, slipped below 24,050 in early Monday trade, indicating a sharply negative opening for the domestic market.
Hopes of renewed peace talks have faded as the conflict in West Asia intensified further. The US has reportedly expanded its air strikes, while Iran has stepped up retaliatory attacks.
The situation around the Strait of Hormuz remains the biggest concern. Iran has reportedly attacked several vessels after rejecting demands to allow unrestricted shipping through the strategic waterway, raising fears of further disruptions to global energy supplies.
India's June Consumer Price Index (CPI) inflation data will be released on July 13. Retail inflation, which stood at 3.93 percent in May, is expected to move above the Reserve Bank of India's 4 percent target, with economists forecasting a reading between 4.1 percent and 4.4 percent.
The data could influence the RBI's Monetary Policy Committee meeting scheduled for early August.
India's trade data will also be released today, while wholesale inflation (WPI) figures are due on Tuesday.
According to the India Meteorological Department (IMD), the southwest monsoon rainfall deficit widened to 17.8 percent as of July 12 after narrowing earlier this month.
Kerala's rainfall deficit has increased to 28 percent, reviving concerns over agricultural output.
Wall Street ended on Friday with modest gains as softer crude oil prices supported sentiment.
South Korean memory chip maker SK Hynix's American Depositary Receipts (ADRs) surged 13 percent after listing in the US.
Meanwhile, SpaceX shares fell 4.5 percent and are now trading about 10 percent below their listing price.
The Dow Jones gained 149.60 points (0.29 percent) to close at 52,637.01. The S&P 500 rose 31.75 points (0.42 percent) to 7,575.39, while the Nasdaq Composite advanced 74.72 points (0.29 percent) to 26,281.61.
US futures were trading sharply lower on Monday morning.
Dow Jones futures: -147 points (-0.28 percent)
S&P 500 futures: -26 points (-0.34 percent)
Nasdaq futures: -195 points (-0.65 percent)
Among Indian ADRs listed in New York:
HDFC Bank ended unchanged at $26.51 after a marginal decline during regular trading.
ICICI Bank recovered in after-hours trading to close at $29.58.
Infosys erased part of its losses to close at $10.96.
Wipro extended gains in after-hours trade to finish at $1.89.
European markets ended mostly higher on Friday, although Germany's DAX closed marginally lower.
Asian equities opened sharply lower following the renewed escalation in West Asia.
South Korea's Kospi fell nearly 3 percent.
Japan's Nikkei declined 1.2 percent.
Australia's ASX slipped 0.2 percent.
Shanghai Composite lost 0.5 percent.
Hong Kong's Hang Seng bucked the trend with a gain of around 0.45 percent.
Indian equities ended strongly higher on Friday, supported by lower crude oil prices and improving monsoon expectations.
Foreign institutional investors (FIIs) remained strong buyers, purchasing equities worth a net ₹2,603.72 crore. Domestic institutional investors (DIIs) bought shares worth ₹2,019.68 crore.
FIIs have invested ₹24,662 crore in Indian equities so far in July after withdrawing ₹49,340 crore during June.
Avenue Supermarts reported a 14.9 percent rise in first-quarter revenue, while net profit grew 11.3 percent. Operating margin improvement remained modest.
LTIMindtree reported a 17.9 percent increase in revenue and a 16.9 percent rise in net profit. Revenue growth in constant currency stood at 6.4 percent.
HCLTech, ICICI Prudential Life Insurance and Bajaj Consumer Care will announce June-quarter earnings today.
Tata Elxsi, L&T Technology Services and Aditya Birla Money are scheduled to report on Tuesday.
Among the major companies reporting later this week are MRPL, Angel One, Union Bank, Fed Fina, HDFC Life, HDFC AMC, HDB Financial Services, ICICI Lombard, Tech Mahindra, Wipro, Newgen Software, CEAT, BHEL, Jio Financial Services, South Indian Bank, Nelco, Piramal Finance, Polycab, Reliance Industries, Federal Bank, RBL Bank, Havells, JSW Steel, Poonawalla Fincorp, HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank.
Gold prices fell despite escalating geopolitical risks as expectations of higher US interest rates strengthened.
Spot gold dropped more than 1 percent in early trade to around $4,060 an ounce before recovering towards $4,080.
In Kerala, the price of 22-carat gold fell ₹360 per sovereign over the weekend to ₹1,05,840.
Silver declined more than 2 percent to around $58.75 an ounce.
This week's key triggers include US inflation data and testimony by Federal Reserve Chair Kevin Warsh before the US Congress.
Copper gained 0.39 percent to $13,408.50 per tonne.
Aluminium fell 1.91 percent to $3,139.50 per tonne, while zinc and tin declined. Lead and nickel posted gains.
International rubber prices continued to strengthen.
RSS-1 rose to $304.70 per quintal in Bangkok, while RSS-3 reached $301.30.
In Kerala, RSS-4 increased to ₹27,600 per quintal.
Cocoa prices dropped 6.04 percent to $6,065 per tonne.
Arabica coffee fell 3.92 percent to $3.34 per pound despite concerns over lower Brazilian production and tightening inventories.
The US Dollar Index, which closed at 100.97 on Friday, climbed above 101.17 in early Monday trade.
The euro weakened to $1.1394, while the pound slipped to $1.3374.
The yield on the US 10-year Treasury rose to 4.589 percent.
The Indian rupee strengthened by six paise on Friday to close at ₹95.32 against the US dollar.
In the offshore non-deliverable forward (NDF) market, the dollar was trading around ₹95.58 on Monday morning.
Brent crude, which settled at $76.01 a barrel on Friday, surged more than 4.5 percent in early Monday trade to around $79.37.
WTI crude climbed to around $74.54 a barrel.
Renewed geopolitical uncertainty weighed on cryptocurrencies.
Bitcoin fell below $63,760, Ether slipped below $1,820, while Solana traded below $77.
Sensex: 77,569.39 (+1.08%)
Nifty 50: 24,206.90 (+1.02%)
Bank Nifty: 58,045.90 (+1.39%)
Nifty Midcap 100: 63,036.80 (+1.40%)
Nifty Smallcap 100: 19,416.50 (+1.55%)
Dow Jones: 52,637.01 (+0.29%)
S&P 500: 7,575.39 (+0.42%)
Nasdaq Composite: 26,281.61 (+0.29%)
US Dollar/INR: ₹95.32 (-₹0.06)
Gold (per ounce): $4,121.40 (-$3.10)
Gold (per sovereign): ₹1,06,200 (+₹280)
Saturday close (per sovereign): ₹1,05,840 (-₹360)
Brent crude: $76.01/barrel (-$0.29)
