Morning Commentary: Inflation Risks Cloud Interest Rate Outlook, Nifty Breaks Key Support
AHMEDABAD, 8 SEPTEMBER: Major European indexes hovered near flat, with very limited liquidity and muted openings as global focus shifted following a U.S. Labour Day holiday. Renewed military exchanges between the U.S. and Iran pushed crude oil and European natural gas prices higher, raising inflation anxieties across industrial and consumer sectors. US equity markets are closely monitoring incoming macroeconomic indicators as the Federal Reserve’s next policy meeting approaches.
Investors are carefully balancing signs of labour market resilience against cooling inflation pressures to forecast whether the central bank will implement further interest rate adjustments.
Large-cap technology and semiconductor stocks continue to dictate daily market swings as Treasury yields fluctuate.
LME Copper rose past $14,500 a ton, reaching a record as tariff-related disruptions rattled metals markets. The move adds to a broader rally in the commodity complex, alongside surging energy prices. India’s average crude import price (Indian Basket) surged to $101 per barrel on Friday and is averaging $99 per barrel in September, up sharply from $83 per barrel in June and $90 per barrel in August. Record U.S. gas prices ahead of Labour Day were also reported, driven by the conflict in Iran and refinery issues.
Nifty resumed its downtrend with a sharp 118-point decline, closing at 23,779 yesterday. Market breadth turned weak, with an advance–decline ratio of 0.82, indicating profit-booking in selective mid and small-caps after Friday’s buying across large and small caps. Nifty is trading below its key moving averages. Yesterday’s session saw the index breach the previous swing low of 23,786, opening the path toward the next support zone around 23,600. On the upside, the 24,000 level is likely to remain strong resistance to any near-term recovery attempts.
Defence stocks will hog the limelight today, as the Defence Acquisition Council (DAC), chaired by Defence Minister Rajnath Singh, accorded Acceptance of Necessity (AoN) for a range of acquisition proposals for the armed forces estimated at ₹1.10 lakh crore, with approximately 98% of the procurements planned to be from Indian industry. Indian equities are poised for a subdued open, on the back of mixed global cues.
Report by: Mr. Devarsh Vakil, Head of Prime Research at HDFC Securities.
(Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing)
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