The Indian stock market is set to commence trading on a bearish note on Thursday as investors digest mixed signals from global financial markets. Both the Sensex and Nifty 50 indices are anticipated to open lower following a holiday pause and geopolitical unrest.
Across Asia, markets displayed a mixed performance. The U.S. stock market managed to close marginally higher in its latest session, driven primarily by gains in the technology sector.
Geopolitical tensions have intensified in the Middle East after Israel and the United States pledged retaliation against Iran for an attack on Tuesday. This ongoing conflict has heightened uncertainty in global markets.
On the monetary policy front, the likelihood of a modest 0.25% reduction in interest rates by the US Federal Reserve in its upcoming November meeting has increased to 65.7%, up from 42.6% just a week prior, according to insights from the CME Group’s FedWatch Tool.
The Indian stock market observed a closure on Wednesday in observance of Gandhi Jayanti, leading to a pause in trades.
In its last session on Tuesday, the Indian stock market experienced a volatile trading period, ultimately concluding mostly flat but slightly skewed to the downside.
The Sensex recorded a slight decline, falling by 33.49 points (0.04%) to end at 84,266.29. The Nifty 50 also saw a reduction, closing down 13.95 points (0.05%) at 25,796.90.
“With mixed global cues and a subdued outlook particularly from European Auto makers, alongside commentary from the US Fed on future rate adjustments, we expect the Indian market to consolidate. Stock-specific movements are likely as we approach the quarterly earnings season, with firms set to announce key pre-quarterly updates,” stated Siddhartha Khemka, Head of Research at Wealth Management, Motilal Oswal Financial Services.
Global Market Indicators for Sensex
Here are key global market cues that could influence the Sensex today:
Asian Markets Performance
Asian markets displayed some resilience on Thursday, riding on positive momentum from Wall Street’s recent performance.
Japan’s Nikkei 225 surged by 2.57%, while the Topix climbed by 2%. In contrast, futures for Hong Kong’s Hang Seng index pointed to a slightly lower opening. Furthermore, equity markets in China and South Korea remained closed due to national holidays.
Gift Nifty Outlook
The Gift Nifty was trading around the 25,725 level, showing a discount of nearly 250 points compared to the previous close of Nifty futures, indicating a likely gap-down opening for Indian stock market indices.
US Market Recap
In its latest session, the US stock market wrapped up with modest gains, primarily propelled by technology shares. However, investors remain cautious given the continuing tensions in the Middle East and the upcoming labor data releases.
The Dow Jones Industrial Average increased by 39.55 points (0.09%) to reach 42,196.52, while the S&P 500 saw a small rise of 0.79 points (0.01%) finishing at 5,709.54. Notably, the Nasdaq Composite gained 14.76 points (0.08%) closing at 17,925.12.
Within specific equities, Nvidia shares climbed by 1.6%, in stark contrast to Tesla, which experienced a decline of 3.5%. Humana Inc’s stock plummeted by 11.8%, and Nike shares fell nearly 7% after the company withdrew its annual guidance amidst low sales.
Tensions in the Middle East
The ongoing conflict in the Middle East has escalated after Iran’s missile strike on Israel on October 1, with Israel now conducting limited ground incursions into Lebanon aimed at Iran-affiliated Hezbollah forces.
US Employment Data Highlights
The latest report from the ADP National Employment revealed a more robust than anticipated increase in US private payrolls for September. The report showed an uptick of 143,000 jobs, following a revised uptick of 103,000 in August. Economists had projected a growth of 120,000 jobs.
In further regulatory news, SEBI has revised its framework for equity derivatives trading. The updated rules now require a higher minimum investment amount and restrict trading to one weekly option contract per exchange, thereby increasing trading costs in this segment.
Insights from the JOLTS Report
The recent JOLTS report revealed an unexpected rise in US job openings in August, up by 329,000 to a total of 8.04 million despite previous decreases. However, hires dropped by 99,000 to rest at 5.317 million.
US Manufacturing Insights
In the manufacturing sector, the ISM’s manufacturing PMI held steady at a weaker score of 47.2 in September, which marks the sixth consecutive month below the neutral threshold of 50, reflecting ongoing challenges in growth.
Japan’s Economic Performance
Japan’s service sector exhibited growth for the third consecutive month in September, with the final au Jibun Bank Service PMI slightly declining to 53.1 from 53.7 in August.
Oil Market Response
Oil prices have seen an upward trend, attributed to escalating tensions in the Middle East which pose risks to crude oil supply routes.
Brent crude futures increased by 0.87%, now at $74.54 a barrel, while US West Texas Intermediate crude futures surged by 1.03%, reaching $70.82 per barrel.
Currency Market Dynamics
The US dollar has reached a one-month high against the yen, trading up by 0.09% at 146.575, following a peak of 146.885 earlier in the session.
The dollar index, which reflects the value of the US dollar against major currencies, ascended to 101.70, achieving a three-week peak and extending a previous session’s gain of 0.45%.
The euro remained stable at $1.10455, and the British pound was steady against the dollar at $1.3261.
(This report includes contributions from various sources.)
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