The Indian stock market began the week on a flat-to-positive note, influenced by mixed global cues and significant economic developments over the weekend. Gift Nifty traded around the 24,223 mark, approximately 10 points above its previous close, signaling a neutral start for Sensex and Nifty 50 indices.
Global Market Cues Impacting the Indian Stock Market
Last week saw Asian markets gaining momentum, with Japan’s yen reaching a three-month low and the U.S. stock markets showing mixed results. Crude oil prices dipped after tensions involving Israel and Iran subsided, while the U.S. dollar surged, contributing to market volatility.
Key Market Triggers to Watch This Week
As the week progresses, investors are monitoring several significant triggers that could impact market trends:
- Q2 2024 Earnings Reports: With many companies reporting their quarterly results, investor sentiment could be swayed depending on earnings performance.
- Monthly Derivatives Expiry: Derivatives expiry can often cause market fluctuations due to last-minute adjustments.
- Geopolitical Developments in the Middle East: Any escalation in geopolitical conflicts, particularly in the Middle East, could affect global markets.
- Foreign Fund Flows: Trends in Foreign Institutional Investor (FII) activity will be closely monitored.
- Oil Prices: Fluctuations in oil prices remain a critical factor, especially with the ongoing tensions involving oil-rich regions.
- Macroeconomic Data: Global and domestic economic indicators, including U.S. presidential election updates, will be under scrutiny.
Recent Market Performance in India
On Friday, India’s Sensex and Nifty 50 saw a broad-based sell-off. The Sensex fell 662.87 points (0.83%), ending below the 80,000 threshold at 79,402.29. The Nifty 50 also declined by 218.60 points (0.9%), closing at 24,180.80. Analysts attributed the downturn to lackluster Q2 earnings and persistent FII outflows.
Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., noted, “Disappointing Q2 earnings and continued FII selling have intensified market concerns. Even with China’s recent stimulus announcement, falling crude oil prices indicate that major economies continue to feel the pinch of the global slowdown.”
Asian Market Update
Asian markets opened higher, led by Japan’s Nikkei, which gained 1.79%, and the Topix, up by 1.38%. South Korea’s Kospi and Kosdaq indices also experienced gains of 0.51% and 0.94%, respectively. Meanwhile, Hong Kong’s Hang Seng index saw a minor decline.
Wall Street Update: Mixed Performance Amid U.S. Dollar Spike
The U.S. stock market saw mixed results on Friday, with notable gains in the tech sector bolstering the Nasdaq. The Dow Jones Industrial Average fell by 259.96 points (0.61%) to 42,114.40, while the S&P 500 eased by 1.74 points (0.03%) to 5,808.12. The Nasdaq, however, rose by 103.12 points (0.56%) to close at 18,518.61.
Among prominent stocks, Tesla saw a 3.36% increase, and Nvidia gained 0.8%, briefly overtaking Apple as the world’s most valuable company by market capitalization. Other tech giants such as Amazon, Apple, and Microsoft also reported gains. In contrast, Goldman Sachs dropped by 2.27%, and McDonald’s stock saw a 2.97% decline.
China’s Monetary Policy Update
The People’s Bank of China (PBOC) announced it would implement monthly reverse repo operations with primary dealers in open market transactions. This move aims to stabilize liquidity and enhance economic stability in China.
Japan’s Political Shift and Economic Outlook
Following Sunday’s elections, Japan’s ruling Liberal Democratic Party (LDP) lost its majority in the lower house, leading to an uncertain political future. The country’s Prime Minister Shigeru Ishiba faces challenges in forming a stable government to guide the world’s fourth-largest economy, particularly as global economic pressures mount.
Oil Price Trends
Over the weekend, oil prices dropped significantly. Brent crude oil decreased by 4.48% to $72.64 per barrel, while U.S. West Texas Intermediate (WTI) futures fell by 4.63% to $68.46. This decline follows a strike by Israel that avoided targeting oil or nuclear facilities, thereby easing supply concerns in the market.
Gold Price Movements
Gold prices fell as the U.S. dollar strengthened. Spot gold dropped by 0.5% to $2,732.90 per ounce, and U.S. gold futures slipped by 0.33% to $2,745.30. A stronger dollar typically exerts downward pressure on gold prices, as it becomes more expensive for non-U.S. investors to buy gold.
Currency Market Developments
The U.S. dollar index surged by 3.6% in October, marking its most significant monthly gain since April 2022. The yen hit a three-month low against the dollar, trading at its weakest levels since July, while the euro and sterling also experienced declines. The yen was particularly pressured, trading at 153.3 against the dollar and hitting a low of 165.36 against the euro.
