On Thursday, the Nifty declined 1.6%, marking its biggest single-day fall since July 8. After the sharp decline, investors are now focused on the market’s performance on Friday, the last trading day of the week.
The Friday trading session could remain challenging for the Indian stock market. The Nifty fell around 1.6% on Thursday, its biggest single-day decline since July 8. Before the start of trading, GIFT Nifty showed a marginal gain, indicating the possibility of a flat to positive opening.
US-Iran tensions, elevated crude oil prices, rising global bond yields and weak Asian markets are currently weighing on Indian equities. Investors will track GIFT Nifty, crude oil prices, FII-DII flows and major global indices.
GIFT Nifty showed a marginal rise on Friday morning. At around 7 a.m., it was trading 0.17%, or 39 points, higher. While this did not indicate expectations of a very b opening for the Indian market, the initial signals were not entirely bearish. Meanwhile, India VIX rose around 23% on Thursday and closed at 12.69. A rise in VIX generally indicates higher market volatility and uncertainty.
US-Iran tensions and crude oil prices remain among the most important global factors for the Indian stock market. Uncertainty over a potential agreement with Iran has increased. Following signals from US President Donald Trump, the possibility of an early deal with Iran weakened. In addition, Houthi activity in the Red Sea and tensions involving Saudi Arabia have increased concerns over global energy supplies.
If crude oil remains elevated for an extended period, it could affect India’s import bill, inflation and corporate margins. As a result, major movements in oil prices remain important for the Indian market.
Friday’s early trading session in Asian markets showed a mixed-to-weak trend. Major moves in the global bond market also affected Asian equities. At 9:57 a.m. Tokyo time, S&P 500 Futures were down around 0.2%, Hang Seng Futures declined around 0.3%, Japan’s Topix was up around 0.6%, Australia’s S&P/ASX 200 fell around 0.6%, and Euro Stoxx 50 Futures were up around 0.4%.
Rising global bond yields also remained a factor for investors. Higher long-term yields in the US Treasury market could increase pressure on equity valuations.
US stocks closed with a marginal decline in the S&P 500 on Thursday. Microsoft shares remained weak, while Meta Platforms gained. Rising crude oil prices and Treasury yields amid tensions in the Middle East also affected market sentiment. However, US markets recovered somewhat from session lows following a Reuters report.
According to the report, the US and Iran were discussing possible ways to end the conflict in stages. The potential framework could include reopening the Strait of Hormuz and changes to the economic sanctions imposed on Iran by Washington.
Gold prices weakened on Friday. A ber US dollar and the possibility that the Federal Reserve could keep interest rates at elevated levels for longer to control inflation put pressure on gold. Expectations of higher-for-longer interest rates can generally weigh on non-yielding assets such as gold.
The activity of institutional investors in the Indian equity market will also remain important. On Thursday, Foreign Portfolio Investors (FII) recorded net selling of around ₹5,027 crore. In contrast, Domestic Institutional Investors (DII) recorded net buying of around ₹4,201 crore. The difference between FII selling and DII buying remains an important indicator for assessing market sentiment.
The Indian rupee weakened by 23 paise against the US dollar on Thursday to close at a provisional level of 95.96. Higher crude oil prices, geopolitical uncertainty and a ber dollar put pressure on the rupee. Currency market movements will also remain important for Indian equities in the coming sessions, particularly if crude oil prices remain elevated.
Waaree Energies, PB Fintech, Lemon Tree Hotels and Dr Lal PathLabs could remain in focus during Friday’s trading session due to corporate developments. Investors will also track banking, IT, energy and other sensitive sectors as global cues and crude oil prices could influence market direction.
