Markets trade in red amid renewed crude oil price rally

Indian equity benchmarks made a cautious start of the September month as traders were worried about a surge in crude price after geopolitical tensions in Middle East resurfaced following reports that United States launched an attack on an Iranian island in the Strait of Hormuz. Foreign institutional investors (FIIs) have also remained sellers, adding pressure to domestic equities. FIIs offloaded equities worth Rs 7,985.88 crore on August 31, 2026. Though, downside remained capped as India's economy grew 7.8% in the April-June quarter of 2026-27, beating the RBI's 7% projection.

Both Sensex and Nifty were trading marginally in red in early deals on Tuesday as investors avoided risk bids ahead of the release of the final HSBC Manufacturing PMI data later in the day. Also, there was some cautiousness ahead of weekly expiry of Nifty F&O contracts later in the day.

On the global front, Asian markets were trading mixed as investors remained cautious about the Federal Reserve’s interest rate outlook and renewed Middle East tensions, while attention turned to stronger economic data from China and South Korea. South Korean exports jumped 68.7% in August from a year earlier, beating forecasts for a 62.6% increase. China’s private-sector manufacturing activity also strengthened in August, offering some support to regional sentiment.

The BSE Sensex is currently trading at 76827.12, down by 130.15 points or 0.17% after trading in a range of 76815.64 and 77083.49. There were 9 stocks advancing against 21 stocks declining on the index.

The gaining sectoral indices on the BSE were TECK up by 0.76%, Oil & Gas up by 0.62%, Energy up by 0.60%, Metal up by 0.53% and IT up by 0.45%, while Realty down by 1.54%, Consumer Durables down by 1.06%, Capital Goods down by 0.65%, Bankex down by 0.51% and Industrials down by 0.48% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 2.73%, HCL Technologies up by 2.06%, Bharti Airtel up by 1.53%, Infosys up by 1.19% and Reliance Industries up by 1.01%. On the flip side, Interglobe Aviation down by 2.35%, Bajaj Finserv down by 2.15%, Titan Company down by 1.50%, State Bank of India down by 1.37% and Axis Bank down by 1.30% were the top losers.

Meanwhile, the Finance Ministry, in its Monthly Economic Review (MER), has said that an intensifying El Nino, which is expected to peak in late 2026, warrants a cautious outlook on domestic food inflation and agricultural output, including the upcoming rabi crops, particularly wheat and mustard. The ministry flagged the external environment as the key source of uncertainty and said that, going forward, there is a need to closely track three global developments: the sovereign bond market worldwide; the potential rise in the global average inflation rate due to higher prices of electronic goods and food items; and investment capital flows from across the world, including developed nations.

It said the domestic economy retained its vigour during August. Domestic demand remained strong, while the external sector remained stable. However, food prices, weather conditions and global uncertainties will need to be closely monitored in the coming months. It added that the global economy remains uncertain due to variations in growth, oil prices and interest-rate policies. Despite these external risks, India's economic activity, inflation and external position have remained relatively stable. Domestic economic activity remains steady, with resilient domestic demand providing support amid some moderation in the pace of expansion. As per data released on August 31, the Indian economy grew 7.8 per cent in the April-June quarter, higher than the RBI's 7 per cent projection. 

Going forward, it said easing cost pressures and firm demand conditions are expected to support economic activity, although the external environment remains a key source of uncertainty. The emergence and persistence of El Nino conditions, with El Nino assessed as the dominant phase through March 2027, warrant close monitoring given their implications for rainfall, crop outcomes and food inflation. Kharif sowing has gained momentum following the intensification of monsoon rains across large parts of the country, although acreage remains below last year's level.

With regard to the external market, the report said the external sector remains well-positioned to absorb pressures arising from changing global trade dynamics and volatile global financial conditions. While the current account deficit widened marginally in Q1 FY27, the subsequent recovery in capital flows, a resilient services surplus and comfortable foreign exchange reserves provide important buffers against external developments. India's continued engagement through BRICS, including initiatives to expand intra-BRICS trade, strengthen MSME participation in international markets and build resilient global value chains, is expected to support export diversification and market access. It added that, taken together, these developments provide a supportive foundation for maintaining external sector stability, even as global uncertainties persist.

The CNX Nifty is currently trading at 24028.35, down by 52.05 points or 0.22% after trading in a range of 24025.20 and 24082.60. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 3.54%, ITC up by 2.99%, Bharti Airtel up by 2.65%, Adani Enterprises up by 2.17% and Bajaj Auto up by 1.75%. On the flip side, Shriram Finance down by 3.73%, Max Healthcare Inst. down by 3.64%, Interglobe Aviation down by 3.35%, Nestle India down by 3.01% and Axis Bank down by 2.65% were the top losers.

Asian markets were trading mixed; Taiwan Weighted jumped 718.74 points or 1.53% to 46,847.21, Jakarta Composite gained 53.44 points or 0.81% to 6,578.92, KOSPI increased 2.04 points or 0.03% to 6,822.06 and Shanghai Composite strengthened 1.26 points or 0.03% to 3,987.56. On the other hand, Hang Seng declined 279.99 points or 1.11% to 25,287.00, Straits Times fell 45.42 points or 0.8% to 5,709.94 and Nikkei 225 was down by 33.93 points or 0.05% to 66,278.00.