Indian benchmark indices fell in Monday’s session, with the Nifty 50 declining as much as 0.74% to 23,997.10 and the Sensex dropping as much as 0.66% to 76,751.32.
The market came under pressure as funds tracking MSCI indexes adjusted their holdings ahead of changes taking effect on Sept. 1, while weaker Asian markets and rising oil prices added to the pressure. Investors are also awaiting India’s GDP and fiscal deficit data later in the day.
MSCI Flows
Funds tracking MSCI indexes are adjusting their portfolios ahead of changes that take effect on Sept. 1. These funds typically make the required portfolio changes a day earlier to ensure their holdings match the benchmark.
The flows are expected to put India’s new closing auction system to the test as funds make their adjustments towards the end of Monday’s session.
Asian Weakness
Asian equities fell after comments from US Federal Reserve Chair Kevin Warsh reinforced expectations of a possible interest-rate increase next month.
South Korea’s Kospi fell 1.65%, while Japan’s Nikkei 225 declined 1.03%. Hong Kong’s Hang Seng Index was down 0.71%.
China’s Shanghai Composite slipped 0.20%, while Australia’s ASX 200 declined 0.10%.
US stock futures also moved lower in early Asian trading. Dow Jones Industrial Average futures fell 85 points, or 0.16%, while S&P 500 and Nasdaq-100 futures each declined 0.2%.
Oil Rises
Oil prices climbed after the US struck Iranian rocket launchers at Larak Island in the Strait of Hormuz, raising concerns about a further escalation in the conflict.
Brent crude had earlier risen 1.4% to $89.30 a barrel.
The US military said it targeted Iranian rocket launchers that were preparing to send mines into the Strait of Hormuz.
The dollar held on to recent gains after Warsh’s comments strengthened expectations of a possible Federal Reserve rate increase next month.
Data Ahead
Investors are also awaiting India’s GDP and fiscal deficit data later in the day. India is expected to have expanded by more than 7% in the latest quarter, maintaining a growth pace that most major economies would envy.
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