Cautious start likely amid heightened geopolitical tension
Geopolitical risks are back on the front pages after Iran shot down an American drone. Markets feared a worsening of the geopolitical situation after the US President said that Iran made a very bad mistake and so the Asian markets are treading cautiously. The outlook for domestic market is a subdued start. At the time of writing, the SGX Nifty was trading near the dotted line at 11,868 level. In today’s session, OMCs are likely to react negatively after a sharp surge in crude oil prices. After witnessing a robust rally on Thursday, the rising crude oil prices have emerged as a new concern for the bulls on D-Street. Also, traders are likely to go light into the weekend to avoid any surprises.
The Asian markets are treading cautiously in early trading on Friday despite the S&P 500 closing at the record high levels. The geopolitical risks are back in a big way in the Middle East after Iran shot down a US drone and the situation remained tense as the US has warned Iran to be ready to face the consequences. The Japanese stock index Nikkei 225 has shed 0.09 per cent, Hong Kong’s Hang Seng has slipped 0.23 per cent and the Kospi has edged lower by 0.33 per cent.
Back home, markets recouped initial losses to end Thursday’s session with gains of over a per cent with frontline gauges Nifty and BSE Sensex reclaiming important psychological levels of 11,800 and 39,600, respectively. The market breadth had improved as 1131 stocks advanced and 699 stocks declined, while 94 stocks remained unchanged on the NSE. The broader market indices like the Nifty Midcap and Smallcap jumped 1.64 per cent and 1.52 per cent, thereby outperforming the frontline gauges. All the secotral indices closed in the positive terrain with Nifty Pharma and Nifty Auto gaining the most.
The US stocks extended their northward movement on Thursday with the S&P 500 ending the session at a new record closing high. The Dow finished up by 249 points at 26,753 and the Nasdaq climbed 64 points to 8,051.
The European indices ended Thursday’s session in the positive territory. The Bank of England held interest rates steady, but the central bank downgraded growth projection for the second quarter for Britain’s economy. Germany’s DAX added 0.38 per cent, UK’s FTSE 100 moved up 0.28 per cent and France’s CAC 40 Index advanced 0.31 per cent.