Indian stock markets are bracing for a sluggish start today as global market trends continue to weigh on investor sentiment. Here’s a rundown of the major shifts that could impact Indian stocks after the weekend’s developments.
The Indian stock market faces a tepid outlook today, with the GIFT Nifty trading around the 23,986 level, reflecting a discount of nearly six points from the previous Nifty futures close. This suggests a subdued opening for the Sensex and Nifty 50. The backdrop of mixed global cues, especially from Asia and the U.S., is contributing to the cautious mood on the street.
1. Gift Nifty Indicates a Tepid Start
The Indian stock market is likely to open on a flat note on December 30, with GIFT Nifty showing a slight dip. Trading at around 23,986, it’s almost six points below the Nifty futures’ previous close, signaling a muted start for Indian equity indices.
This early dip follows the broader trend of global markets, which ended the week with negative sentiment. As a result, both Sensex and Nifty 50 might follow this pattern with a subdued opening today, with investors awaiting further market triggers before making major moves.
2. Sluggish Asian Markets Dragging Indian Sentiment
Asian stock markets have also shown weakness today, adding to the negative tone for global equities. Japan’s Nikkei 225 dropped by 0.21%, while South Korea’s Kospi and Kosdaq indices fell by 0.3% and 0.41%, respectively. The MSCI Asia-Pacific index saw a 0.2% dip, although it remains up by 16% for the year.
This downward momentum from Asia reflects concerns in global markets, especially in the wake of a pullback in technology stocks in the U.S. last week. With Asian markets following the same trend, Indian investors will likely keep a cautious stance.
3. U.S. Stock Market’s Downward Spiral Continues
The U.S. stock market ended the week in the red, as investors took profits across various sectors. The Dow Jones dropped 333.59 points, or 0.77%, while the S&P 500 fell by 1.11%, and the tech-heavy Nasdaq Composite lost 1.49%. The primary drag came from technology stocks, which had been a key driver of U.S. market growth over the past year.
The performance of the U.S. market is likely to influence sentiment in India as well. With profit-taking setting in, there’s caution in global markets, which will reflect in local indices.
4. Banking and Auto Stocks Lead Friday’s Gains
Despite the overall global downturn, Friday saw some positive movement in the Indian markets, driven by the banking and auto sectors. The Sensex gained 226.59 points, or 0.29%, closing at 78,699.07, while Nifty 50 rose 63.20 points, or 0.27%, ending at 23,813.40.
Banking stocks like HDFC Bank, ICICI Bank, and Kotak Mahindra Bank saw significant buying interest, while auto stocks also contributed to the day’s positive closing. This performance suggests that sector-specific optimism might cushion broader market declines in the near term.
5. Investors Eye December Quarter Updates
Investors are closely watching for upcoming updates for the December quarter (Q3 FY25), which will give a glimpse into the earnings performance of key sectors. Early signs from sectors like banking and auto are expected to shape the outlook for the broader market. With Q3 results starting to roll in, these updates will be a key trigger for market movement in the first week of January.
Siddhartha Khemka from Motilal Oswal Financial Services emphasized that the lack of major triggers in the near term means that the market is likely to remain range-bound. The quarterly updates, especially from companies with strong earnings growth prospects, are expected to provide much-needed direction.
6. U.S. Treasury Yields and Global Economic Sentiment
One of the critical factors affecting market movement in the coming days will be the trajectory of U.S. Treasury yields. With yields relatively stable for now, investors are keeping a close eye on any signs of volatility in the bond market, which could impact equity markets worldwide.
The uncertainty over U.S. economic policies, as well as inflation concerns, continues to cast a shadow over global markets. Higher yields generally have an inverse relationship with equities, and any sudden movement could add pressure on stock markets globally, including India.
7. Upcoming Data and Global Cues to Guide Market
Looking ahead, investors are bracing for a slew of economic data from both domestic and global markets. Key indicators include auto sales data, macroeconomic releases from major economies, and the flow of foreign funds. These factors will provide insight into how global markets are adapting to the ongoing economic uncertainties, particularly in light of geopolitical tensions and trade policy shifts under the new U.S. administration.
As the week progresses, global economic data will be pivotal in guiding investor decisions, especially in the face of volatile international markets. Additionally, the anticipation of the flow of foreign funds into India will also play a significant role in determining the near-term direction of the stock market.
