Bearish Risk: US Tech Slide & Rising Oil Prices May Hit Indian IT

US stock futures, particularly for the Nasdaq 100 and S&P 500, are experiencing mild losses, with the Nasdaq 100 futures down 0.7%. This downturn is attributed to escalating Middle East tensions, rising bond yields, and increasing oil prices, which are collectively cooling momentum in the US tech sector.

This development is significant for Indian markets as global market sentiment, especially from the US, often dictates the mood on Dalal Street. A weakening US tech sector and broader market can lead to FII outflows or reduced inflows, impacting Indian equities. Furthermore, rising oil prices have direct implications for India's import bill and inflation.

Indian IT stocks like TCS, Infosys, Wipro, and HCL Technologies are likely to face negative pressure due to their high correlation with the US tech sector and dependency on US clients. Conversely, rising oil prices could provide a positive impetus for upstream oil and gas companies such as ONGC, while having a mixed impact on integrated players like Reliance Industries due to refining margin pressures.

Traders should closely monitor the opening of US markets and the trajectory of crude oil prices. Key indicators to watch include the Nifty IT index for signs of weakness and the Nifty Energy index for potential strength. Any de-escalation in Middle East tensions or stabilization in bond yields could provide a reprieve.

• •US stock futures showed mild losses on May 19.
• •Nasdaq 100 futures fell 0.7% and S&P 500 futures dropped 0.4%.
• •This marks a potential longest losing streak since March for US futures.
• •Middle East tensions, rising bond yields, and oil prices contributed to cooling momentum in tech stocks.
• •Risk flag: Sudden de-escalation of Middle East tensions