The Indian stock market is poised for a lower opening on Tuesday as investor sentiment remains shaky amid a significant global sell-off. The benchmark indices, Sensex and Nifty 50, are anticipated to follow global trends, reflecting the prevailing volatility.
Asian stock markets are predominantly trading lower, mirroring the sharp decline in the US stock market, which experienced substantial losses overnight. This downturn has been largely driven by a sell-off in technology stocks and a reassessment by traders regarding the likelihood of US Federal Reserve interest rate reductions.
In the aftermath of a robust US jobs report released on Friday, traders have significantly curtailed their expectations for a major US Fed rate cut. Currently, they are anticipating an 86% probability of a 25-basis-point cut, while the likelihood of no rate reduction is estimated at approximately 14%, based on the latest data from CME’s FedWatch tool.
On Monday, the Indian stock market witnessed a downturn for the sixth consecutive session, driven by continuous foreign institutional investor outflows. This trend has added pressure to the market, coinciding with rising crude oil prices, which have further dampened investor sentiment.
The Sensex fell by 638.45 points (0.78%), closing at 81,050.00, while the Nifty 50 saw a 218.85-point (0.87%) decrease, ending at 24,795.75. Such declines highlight the fragile state of the market amid external and internal pressures.
According to Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services Ltd, “The outflow of ₹30,700 crore by foreign institutional investors in just three days of October, combined with the surge in crude oil prices, has adversely affected overall market sentiment. We foresee continued pressure on the markets in the near term until the selling by FIIs begins to stabilize. This week’s spotlight will be on the RBI policy outcomes and the commencement of the Q2 FY25 earnings season.”
Key Global Market Cues for Sensex
Tracking the global trend, Asian markets have shown a downward trajectory, with MSCI’s broadest index of Asia-Pacific shares outside Japan witnessing a marginal decline of 0.05%.
Asian Markets Performance
Japan’s Nikkei 225 index fell by 0.75%, the Topix index dropped 0.88%, while South Korea’s Kospi saw a decline of 0.61%. Notably, despite overall market downtrends, Chinese stocks opened strong after a lengthy holiday, with the CSI 300 index surging over 10% initially, although Hong Kong’s Hang Seng index fell by more than 3%.
Gift Nifty Update
The Gift Nifty was trading around the 24,860 level, reflecting a discount of nearly 130 points against the previous close of Nifty futures. This indicates a negative sentiment and a challenging start for Indian stock indices.
Wall Street Update
The US stock market faced significant losses on Monday, primarily due to a sell-off in technology stocks. The Dow Jones Industrial Average plummeted by 398.51 points (0.94%), closing at 41,954.24. Similarly, the S&P 500 and Nasdaq Composite also recorded declines of 0.96% and 1.18%, respectively.
Prominent tech stocks were affected as Alphabet’s shares decreased by 2.5%, Apple by 2.3%, and Amazon’s stock fell by 3%. However, not all companies fared poorly; Generac Holdings stocks surged by 8.52%, while Pfizer and Air Products and Chemicals saw increases of 2% and 9.5%, respectively.
Treasury Yield Movements
The benchmark US Treasury 10-year yield has crossed the 4% mark for the first time in over two months, reflecting shifting market expectations regarding further US Fed rate cuts. The yield rose 3.9 basis points to 4.019%, marking its highest level since late July.
Additionally, the two-year US Treasury yield also reached a high of 4.0270%, indicating a broader trend of rising yields as the market anticipates adjustable monetary policy.
International Market Highlights
Samsung Electronics disclosed that its estimated operating profit for Q3 surged 274%, though it fell short of analysts’ expectations. The preliminary operating profit reached approximately 9.1 trillion won ($6.8 billion), compared to expectations of 10.3 trillion won.
Japan’s Economic Indicators
Japan’s real wages adjusted for inflation fell by 0.6% in August, reversing two months of gains. Additionally, household spending declined by 1.9% year-over-year, though seasonally adjusted spending showed a 2.0% increase from the previous month.
Commodity Markets: Oil and Gold
Crude oil prices experienced a slight drop amid profit booking after reaching their highest levels in over a month. Brent crude futures dipped 0.3% to $80.70 per barrel, while US West Texas Intermediate futures also fell by 0.3%, settling at $76.94 a barrel. In the gold market, prices remained steady as market participants await insights from the US Fed’s recent meeting, with spot gold trading at $2,643.68 per ounce.
(With inputs from market sources)
Disclaimer: The analysis and recommendations provided herein reflect the views of individual analysts and brokerage firms. Investors are advised to consult certified professionals before making investment decisions.
