GIFT Nifty Signals Flat Start As Global Chip Sell-Off, Crude Oil Prices Keep Markets On Edge

GIFT Nifty was trading around 24,143 in early trade on July 16, indicating a flat to mildly positive start for the Indian stock market. The domestic benchmarks had ended almost unchanged in the previous session after a volatile day of trading.

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The Sensex gained 1.44 points to close at 77,186.87, while the Nifty 50 declined 5.75 points, or 0.02%, to settle at 24,072.75. Early gains were erased during the second half of the session as selling pressure emerged in the broader market.

Asian Markets Decline On AI Valuation Concerns

Asian equities fell for a second consecutive session as a sell-off in semiconductor stocks continued. Concerns over the scale of artificial intelligence investments and the ability of companies to justify high valuations weighed on chip stocks.

The weakness in Asian markets followed a decline on Wall Street, where technology shares came under pressure.

U.S. Stocks End Lower

The Dow Jones Industrial Average fell 105.32 points, or 0.20%, to 52,553.32. The S&P 500 declined 38.63 points, or 0.51%, to 7,533.77, while the Nasdaq Composite dropped 387.28 points, or 1.47%, to 25,881.95.

Chip stocks remained among the biggest drags on the technology-heavy Nasdaq. The decline came despite generally positive U.S. economic data and the early performance of the second-quarter earnings season.

Brent Crude Oil Price Rises Over 11% This Week

The Brent crude oil price rose 0.7% to $84.83 a barrel, while U.S. crude gained 0.7% to $79.49 per barrel. Both benchmarks were headed for weekly gains of more than 11%, marking their strongest weekly advance since April.

The rise in crude oil prices remains an important factor for India, which imports a large share of its energy requirements. Higher oil prices can affect the country’s import bill and influence inflation and currency movements.

Gold was also on course for its biggest weekly decline since early June as renewed hostilities in the Middle East increased concerns over inflation and the outlook for U.S. interest rates.

Dollar Index, Bond Yields Remain Steady

The dollar held broadly steady but was headed for a weekly decline after softer-than-expected U.S. inflation data reduced expectations of an immediate Federal Reserve rate hike. The 10-year U.S. Treasury yield stood at 4.55%, while the 2-year yield was at 4.14%.

Asian currencies traded mixed against the U.S. dollar. The Indonesian rupiah gained 0.456%, followed by the South Korean won at 0.218% and the Philippine peso at 0.026%. The Malaysian ringgit declined 0.23%, while the Chinese renminbi and Taiwan dollar fell 0.081% and 0.074%, respectively.

Foreign Investors Continue Selling Indian Equities

Foreign institutional investors remained net sellers for the fourth consecutive session on July 16, selling Indian equities worth ₹4,200 crore. The domestic institutional investors have now increased their buying spree for the seventh consecutive session and bought stocks valued at ₹2,986 crore.

Since the GIFT Nifty is expected to give a stable start, investors are expected to monitor the international stocks in technology, oil prices, currencies, and institutional activities as the day of trading starts.