Markets set for cautious start; MSCI rejig, HDFC Bank in focus

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Indian shares were set for a muted open on Monday, with investors bracing for potential volatility from MSCI’s index rejig under the new closing auction system, while an escalation in the Iran war and HDFC Bank’s CEO resignation could also weigh on sentiment.

GIFT Nifty futures were at 24,222.5 points as of 8:11 am IST, indicating a muted start for the Nifty 50. The benchmark index closed at 24,175.65 on Friday and posted its third straight weekly decline.

MSCI’s quarterly index changes will be implemented at Monday’s close and take effect on September 1. As part of its August review, the index provider added four Indian stocks to its widely tracked Global Standard index and removed three.

This would be the first MSCI rebalancing under India’s new closing auction system, which has led to sharp swings in benchmark indexes, especially on monthly derivatives expiry days.

“With these (passive fund) flows executed around the closing auction, the final half-hour could see outsized moves in affected stocks and the broader index, potentially making the closing print less representative of underlying market sentiment,” said Hariselvan Radhakrishnan, founder and CEO of HST Wealth.

Meanwhile, global sentiment soured after US forces struck two Iranian launchers, marking the first known American strikes on Iran since late July.

Brent crude futures jumped about 2.5 per cent to $90 per barrel, while Asian markets were down 0.7 per cent.

Among stocks, the focus will be on HDFC Bank. India’s largest private lender said on Saturday that its Chief Executive Sashidhar Jagdishan will not seek reappointment when his term ends in October.

The bank is likely to name Deputy Managing Director Kaizad Bharucha as one of two options for its next CEO, Reuters reported, citing two people familiar with the matter.

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