Indian stock market: The Indian stock market is projected to begin Thursday with a subdued tone, in response to lackluster global market signals.
Asian markets experienced a decline, and US stocks closed in negative territory overnight, following the release of the US Federal Reserve meeting minutes, which suggested that interest rates would stay elevated for an extended period.
Crude oil prices experienced a surge due to escalating geopolitical tensions in the Middle East, contributing to a negative sentiment. The main stock indices concluded lower for the second consecutive session on Wednesday, with investors opting to capitalize on profits in high-valuation stocks.
The Sensex recorded a decline of 535.88 points, or 0.75%, settling at 71,356.60, while the Nifty 50 concluded 148.45 points, or 0.69%, lower at 21,517.35. Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd., commented, “We anticipate the market to consolidate and take a pause before the commencement of quarterly results, leading to more stock-specific actions.”
Key global market cues for Sensex today include a downturn in Asian markets, particularly in Japan where the Nikkei 225 plummeted by 2.26% and the Topix declined by 1.25% on the first trading day of 2024. South Korea’s Kospi fell by 0.64%, and Kosdaq by 0.69%. However, there were indications of a rebound in Hong Kong’s Hang Seng index futures. Additionally, Australia’s S&P/ASX 200 experienced a 0.5% loss.
In terms of Gift Nifty, it was observed trading around the 21,620 level, compared to Nifty futures’ previous close of 21,595. This suggests a flat-to-positive opening for Indian stock market indices.
On Wednesday, the US stock market witnessed a decline, primarily driven by continued profit-taking following a robust performance in 2023. The minutes from the US Federal Reserve’s December meeting failed to uplift market sentiments.
The Dow Jones Industrial Average recorded a drop of 284.85 points, or 0.76%, closing at 37,430.19, while the S&P 500 experienced a decline of 38.02 points, or 0.8%, concluding at 4,704.81. The Nasdaq Composite ended 173.73 points, or 1.18%, lower at 14,592.21.
Notable megacap stocks sensitive to interest rates, such as Nvidia, Apple, and Tesla, saw declines ranging from 0.7% to 4%. In contrast, Citigroup shares witnessed a 1.1% rise.
Regarding the US Federal Reserve minutes, officials expressed increasing confidence at their December meeting that inflation was getting under control, with diminishing “upside risks.” There was also growing concern about the potential harm that an “overly restrictive” monetary policy might inflict on the economy, as reported by Reuters.
In December, Japan’s factory activity experienced its most significant contraction in 10 months, with the final au Jibun Bank Japan manufacturing Purchasing Managers’ Index (PMI) decreasing to 47.9 from November’s 48.3. This marks the weakest reading since February when the index reached 47.7.
Apple’s stock faced a substantial downturn, witnessing a nearly 5% decline over the past four consecutive trading days. This slump resulted in the loss of approximately $370 billion in market value. The decline in Apple shares was influenced by a downgrade from Barclays Plc analysts earlier in the week. They downgraded the tech giant’s shares to underweight, citing expectations of soft demand for iPhones in the future.
Crude oil prices experienced a notable surge due to supply disruptions in Libya and heightened tensions in the Middle East. Brent crude oil registered a 0.22% increase, reaching $78.42 per barrel, following a more than 3% climb on the previous day. Similarly, the US West Texas Intermediate (WTI) crude saw a 0.40% gain, reaching $72.99.
Meanwhile, the US dollar reached a two-week high on Wednesday, and treasury yields touched 4% for the first time in two weeks. The dollar index maintained its gains, rising by 0.2% to 102.45 and reaching a two-week peak of 102.61 earlier. Concurrently, the 10-year yield declined to 3.90%, marking a 4.1 basis points (bps) decrease.