Author: Aadarsh Patel | EQMint

Indian equity markets are likely to open higher on Tuesday after five consecutive weeks of losses, although elevated crude oil prices, rising global bond yields and uncertainty ahead of the US Federal Reserve’s policy meeting could limit gains.

GIFT Nifty futures were trading around 23,525.5 points in early trade, signalling a positive start for the benchmark Nifty 50. The Nifty had closed at 23,398.1 in the previous session, while Indian markets were shut on Monday for a local holiday.

HDFC Bank in Focus Over CEO Succession

HDFC Bank is expected to remain among the key stocks to watch after the country’s largest private-sector lender submitted the names of two candidates to the Reserve Bank of India for its next CEO.

The move formally begins the succession process for Sashidhar Jagdishan, who is due to retire later this year. HDFC Bank carries one of the largest weights in India’s benchmark indices, making developments at the lender important for overall market sentiment.

The bank’s shares later gained 2.1% during Tuesday’s trading session after the CEO candidates were announced. Analysts at Nomura said an external candidate with a strong banking background could support a strategic reset and potentially improve the bank’s valuation over time.

Nifty, Sensex Face Pressure From Rising Oil

Despite expectations of a stronger opening, investors remain cautious as Brent crude trades near $107 a barrel.

Higher oil prices are a concern for India because the country is one of the world’s largest crude oil importers. A sustained rise in energy costs could increase inflationary pressures, affect the country’s import bill and complicate the outlook for monetary policy.

The latest data showed India’s retail inflation rose to 4.82% in August from 4.45% in July, adding to concerns over price pressures.

Global Bond Yields Add to Market Uncertainty

Investors are also keeping a close watch on global bond yields ahead of the US Federal Reserve’s meeting this week.

Higher US Treasury yields can reduce the appeal of emerging-market assets and potentially increase volatility in Indian equities. Global markets have also been unsettled by the rise in oil prices and growing geopolitical tensions in the Middle East.

Indian equities have already faced a difficult period. The Nifty 50 and Sensex lost around 4.8% each over the previous five weeks, leaving investors looking for opportunities in stocks that have seen sharp declines.

IT Stocks Could Provide Some Support

Information technology stocks may provide some relief to the broader market after a strong rebound in the sector.

In Tuesday’s trading session, the Nifty IT index rose 3.4%, while TCS and Infosys gained around 5% each. IT stocks have underperformed the broader market over the past year amid concerns that advances in artificial intelligence could disrupt traditional technology-services businesses.

Broader Market Remains Vulnerable

While large-cap stocks could benefit from bargain hunting, the broader market remains under pressure.

Small-cap and mid-cap indices declined during Tuesday’s session, while most major sectors traded lower. Investors are expected to remain selective as they assess the impact of crude oil prices, inflation, interest-rate expectations and geopolitical developments.

The market’s near-term direction could therefore depend on whether oil prices stabilise and global bond yields moderate.

What Investors Will Watch

For Indian markets, key factors to track this week include the movement in Brent crude, the Federal Reserve’s policy decision, global bond yields, foreign investor flows and developments surrounding the Middle East conflict.

HDFC Bank’s CEO succession process will also remain an important domestic trigger because of the lender’s significant weight in the Nifty and Sensex.

With Indian benchmarks coming off a prolonged losing streak, Tuesday’s expected positive opening could provide some relief. However, whether the gains hold through the trading session will depend heavily on global cues and the movement in oil prices.

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