Stock market today: Will Sensex, Nifty fall as crude crosses $92 mark?

GIFT Nifty futures were trading around 24,117 at 7:56 am IST, indicating that the Nifty50 could open below Tuesday's close of 24,187.70.

In Short

• Dalal Street to open cautiously as Brent crude hits $92 a barrel
• Rising oil prices raise inflation, import bill, and corporate profit concerns
• FPIs bought Rs 1,650 crore in Indian equities, supporting markets

Dalal Street is likely to open on a cautious note on Wednesday as Brent crude climbed to $92 a barrel, its highest level since June, raising fresh concerns over inflation, corporate earnings and India's import bill amid the escalating conflict in the Middle East.

GIFT Nifty futures were trading around 24,117 at 7:56 am, indicating that the Nifty50 could open below Tuesday's close of 24,187.70.

The biggest concern for Dalal Street is crude oil, with Brent futures rising 1.09% to $92 per barrel, while WTI crude gained 1.02% to $85.20.

The surge in oil prices comes as tensions in the Middle East continue to escalate. Fresh attacks between the US and Iran have heightened fears of supply disruptions, while Yemen's Houthi rebels have threatened a naval blockade of Saudi Arabia. Adding to supply concerns, two oil tankers carrying Saudi crude to Asia reversed course in the Red Sea on Tuesday, while another tanker was reportedly hit in the Strait of Hormuz.

WHY $92 BRENT CRUDE MATTERS FOR INDIA

Higher crude prices are generally seen as negative for the Indian economy because the country imports nearly 85% of its crude oil requirement.

A sustained rise in oil prices increases India's import bill, widens the current account deficit, puts pressure on the rupee and can fuel inflation. It also raises input costs for several industries, squeezing corporate profit margins.

Oil-intensive sectors such as aviation, paints, tyres, chemicals and consumer goods companies could remain under pressure if crude prices continue to rise.

Consumer goods companies are already expected to report pressure on June-quarter margins as higher raw material costs linked to the Middle East conflict offset the benefits of resilient demand and price hikes.

Brokerages expect investors to closely monitor management commentary on input cost inflation, rural demand and the progress of the monsoon during the ongoing earnings season.

ASIAN MARKETS, FPI FLOWS OFFER SUPPORT

Despite the jump in crude prices, broader Asian markets traded higher on Wednesday, led by gains in technology stocks, suggesting investors were looking beyond geopolitical risks for now.

Foreign investor flows also remain supportive.

Foreign Portfolio Investors (FPIs) bought Indian equities worth Rs 1,650.16 crore on Tuesday, according to provisional data, while Domestic Institutional Investors (DIIs) were net sellers of Rs 656.88 crore.

FPIs have now invested around $1.43 billion in Indian equities so far in July, putting them on track for their first monthly net purchase in five months. Continued overseas buying could help cushion the impact of higher oil prices.

EARNINGS REMAIN IN FOCUS

Apart from global developments, the June-quarter earnings season will remain another key trigger for the market.

Dr Reddy's Laboratories, Eternal and Nestle India are among the Nifty 50 companies scheduled to announce their quarterly results on Wednesday.

Investors will particularly watch commentary from FMCG companies on raw material inflation, pricing strategies and rural demand as companies navigate rising input costs.

MARKET OUTLOOK

Shrikant Chouhan, Head of Equity Research at Kotak Securities, said the benchmark indices continue to trade within a broad range and a decisive move is yet to emerge.

"Technically, the benchmark indices continue to form indecisive candlestick patterns, suggesting that the current range could break in either direction. However, a meaningful breakout will be confirmed only if the Nifty surpasses 24,500 (Sensex 78,700) or slips below 24,000 (Sensex 76,800) on a closing basis. Until then, the market is likely to remain stock-specific with limited index movement," he said.

He advised investors to stay selective rather than chase the market.

"The preferred strategy remains unchanged: reduce weak long positions in the 24,350-24,450 (Sensex 78,300-78,600) zone, while selectively accumulating quality stocks on declines," Chouhan added.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

- Ends