Oil at $115.3 Pressures Indian Stocks Ahead of Fed Decision
Key Facts
Indian stocks opened lower on Wednesday, October 28, as oil prices rose and concerns about supply disruptions resurfaced, while investors awaited the Federal Reserve’s decision and the listing of Jio Platforms. By 9:15 a.m. India time, the Nifty 50 was down 0.32% at 22,678 points, and the Sensex had fallen 0.47% to 73,253.44 points, according to Reuters data. Reuters said higher oil prices weighed on risk appetite in the market. That followed Tuesday’s session, when both indexes ended trading little changed, with the Nifty 50 down 0.02% at 22,749.75 points and the Sensex down 0.01% at 73,598.67 points. EL7 data show the Sensex closed Wednesday at 72,883.64 points, compared with the previous day’s close of 73,598.67 points, distinguishing the opening decline from the session’s path through the close.
Oil prices rose 1.2% to $115.3 a barrel after an attack on a refinery in Saudi Arabia, Reuters reported. The attack revived concerns about energy supply disruptions and inflation, the news agency said, putting oil prices at the forefront of factors affecting investors’ risk appetite. A research official at Motilal Oswal had previously said continued attacks on Saudi Arabia kept concerns about supply disruptions and inflation elevated. The official added that “domestic markets are likely to remain weak.” The assessment came amid Tuesday trading, when oil held near a six-month high and the Fed decision was in focus for investors.
By contrast, the preliminary reading of India’s HSBC Composite Purchasing Managers’ Index showed business activity accelerating in October to 56.7 points, from 55.9 points in September, exceeding the median forecast of 56.1 points in a Reuters poll. Reuters said the reading marked a four-month high, signaling an expansion in private-sector activity despite the decline in stocks. Services drove most of the acceleration, with its index rising to 56.2 points from 55.2 points in September. The manufacturing index fell to 54.9 points from 55.1 points, although factory output edged higher, Reuters reported. The news agency linked the sector index’s decline to slower hiring, highlighting a divergence between improving services and a weaker manufacturing reading.
Companies said hiring nearly stalled in October, with rising workloads met by relying on existing staff. At the same time, backlogs fell at one of the fastest paces in about six and a half years, according to Reuters. On external demand, overall export orders expanded at their fastest pace in six months. Input-cost inflation also slowed to its lowest level in about a year, the same source reported. These details present a mixed picture of activity: stronger export orders and slower input costs alongside slower hiring and a manufacturing index below its September reading.
Industrial production data were next on Wednesday’s schedule, as India’s Ministry of Statistics announced that its estimate of the September Industrial Production Index would be released on October 28. The date followed annual growth of 8.0% in the index in August, according to the ministry via the government’s Press Information Bureau. The expected release was therefore a test of whether August’s pace continued into the following month, while the figure available in the report remained the August reading. The Federal Open Market Committee meeting ran on October 27 and 28, with a press conference on October 28, according to the Federal Reserve’s calendar. The decision expected that day was among the factors keeping investors on alert during the Indian market open.