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

Indian stocks are expected to open cautiously on Monday, with investors wary of potential volatility stemming from MSCI's index revision under the new closing auction system and concerns over the Iran conflict, as well as the resignation of HDFC Bank's CEO. As of 8:11 a.m. IST, Nifty futures stood at 24,222.5 points, hinting at a subdued opening for the Nifty 50.

The benchmark index closed at 24,175.65 on Friday, marking its third consecutive weekly decline. MSCI's quarterly index adjustments will be applied at the market's close on Monday and will commence on September 1. The index provider added four stocks, including HDFC Bank, to its Global Standard index and removed three during its August review, marking the first rebalancing under India's new closing auction system.

This adjustment could trigger significant shifts in the benchmark index, particularly during monthly derivatives expiry periods, as highlighted by Hariselvan Radhakrishnan, founder and CEO of HST Wealth. The global market sentiment took a hit after the US launched strikes on two Iranian launchers, which was the first known American action against Iran since late July.

This move caused Brent crude to rise by around 2.5% to $90 per barrel, and Asian markets to decline by 0.7%. The market will closely monitor HDFC Bank, India's largest private lender, as its CEO, Sashidhar Jagdishan, announced he will not seek reappointment after his term ends in October. The bank is expected to appoint Kaizad Bharucha as one of two potential successors, according to two sources familiar with the situation.