As the Indian stock market gears up for a new trading week, the Sensex and Nifty 50 indices are anticipated to open on a positive note this Monday. This optimism follows a series of gains in global markets and a challenging week that left Indian indices reeling.
Asian markets exhibited mixed performances with Japanese stocks making notable gains. Meanwhile, the US stock market closed on a high note on Friday after a strong jobs report boosted investor sentiment.
In light of the recent US jobs data, market expectations surrounding a potential rate cut by the US Federal Reserve have shifted significantly. Traders now see a 95% likelihood of a 25 basis points rate cut in November, compared to a 65% probability early last week. The chance of no cut being implemented stands at just 5%, according to the CME’s FedWatch tool.
Despite anticipated positive openers, last Friday proved tough for the Indian stock market, which saw the indices decline by nearly 1% for the fifth consecutive session. This consistent downtrend reflects broader market uncertainties.
On Friday, the Sensex recorded a sharp drop of 808.65 points, or 0.98%, closing at 81,688.45, while the Nifty 50 slid by 235.50 points, or 0.93%, to settle at 25,014.60.
Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services Ltd, remarked, “We expect markets to consolidate this week amid growing cautiousness due to escalating tensions in West Asia. The beginning of the earning season is expected to drive stock-specific actions. Furthermore, we will be paying close attention to interest-sensitive stocks ahead of the RBI policy meeting next week, as the commentary from the bank will be crucial, despite a rate cut not being anticipated.”
Investors should remain attentive to these significant market drivers as they could greatly influence trading sentiment.
Key Global Market Cues
Current indications are pointing towards a positive opening for Indian markets with GIFT Nifty trading around the 25,260 mark, which suggests a premium of nearly 70 points compared to the previous Nifty futures close.
Performance of Asian Markets
Asian markets saw various performances today, with Japan’s Nikkei 225 climbing 2.03%, while the Topix index increased by 1.62%. On the other hand, South Korea’s Kospi dipped by 0.28% while the Kosdaq climbed by 0.37%. Futures for Hong Kong’s Hang Seng index implied a lower commencement.
US Market Performance
The US stock market closed significantly higher on Friday, leading to the Dow Jones reaching a record closing high. The Dow Jones Industrial Average rose by 341.16 points, or 0.81%, to 42,352.75; the S&P 500 climbed 51.13 points, or 0.90%, to 5,751.07, and the Nasdaq Composite increased by 219.37 points, or 1.22%, finishing at 18,137.85.
Job Market Insights
The US experienced notable job growth in September, with nonfarm payrolls increasing by 254,000 jobs—markedly above the 140,000 jobs expected by economists. As a result, the unemployment rate dipped to 4.1%, reflecting a strong job market.
Impact of Global Events on Markets
Meanwhile, the Israel-Iran conflict continues to escalate, with Israel intensifying airstrikes on Gaza and southern Lebanon, resulting in significant civilian casualties.
Currencies and Commodities
The US dollar has enjoyed a rally following the robust jobs data, with the dollar index sustaining a flat position but previously rising 0.5% on Friday. Additionally, crude oil prices decreased slightly after hitting their highest weekly gain in over a year, with Brent crude and West Texas Intermediate prices falling by 0.5% to $77.62 and $74.03 per barrel, respectively.
Gold and Foreign Institutional Investments
Gold prices also took a hit, dropping 0.1% to $2,650.79 per ounce, influenced by a stronger dollar and lowered expectations for aggressive rate cuts. Notably, foreign institutional investors significantly sold Indian shares worth approximately ₹9,896.95 crore, while domestic institutional investors sourced shares worth ₹8,905.08 crore.
In conclusion, the Indian markets are expected to brace for a volatile week ahead, with the interplay of global signals, particularly in light of the ongoing geopolitical situations, central bank meetings, and the commencement of the earnings season.
(This report is compiled with inputs from various financial sources.)
Disclaimer: The interpretations and recommendations presented here are reflective of individual analysts or brokerage firms and do not necessarily represent the views of this publication. It is advised that investors consult certified financial experts prior to making investment decisions.
