8 Overnight Changes in Indian Stock Market: Gift Nifty, US Rally

Tuesday's opening of the local equity indices, Sensex and Nifty 50 is anticipated to be higher due to advances in international markets.

Asian markets saw gains, as investors turned their attention to the Democratic National Convention and the next Jackson Hole Economic Symposium as the US stock market surged overnight, driven by tech firms.

Due to conflicting global indications and some profit-taking at higher levels, the Indian stock market indexes closed the day flat on Monday.

The Nifty 50 closed at 24,572.65, down 31.50 points, or 0.13%, from the previous finish, while the Sensex slid 12.16 points, or 0.02%, to conclude at 80,424.68.

Global Market Overview

Asian Markets Performance

Asian stock markets exhibited a strong performance today, driven by the positive momentum from Wall Street. Japan’s Nikkei 225 surged by 1.1%, and the broader Topix index climbed 0.78%. South Korea’s Kospi increased by 0.99%, while the Kosdaq saw a notable rise of 1.19%. Additionally, Hong Kong’s Hang Seng index futures pointed to a higher opening, reflecting widespread optimism in the region’s financial markets.

US Stock Market Rally

The US stock market ended Monday’s session on a high note, led by a rally in technology stocks. Both the S&P 500 and Nasdaq Composite extended their winning streaks to eight consecutive sessions, the longest run so far in 2024. The Dow Jones Industrial Average gained 236.77 points, or 0.58%, closing at 40,896.53. The S&P 500 rose by 54 points, or 0.97%, to end at 5,608.25, while the Nasdaq Composite increased by 245.05 points, or 1.39%, reaching 17,876.77. Major tech stocks contributed significantly to this rally: Nvidia saw its share price rise by 4.35%, Intel gained 3.11%, Microsoft increased by 0.73%, and Alphabet added 2.22%. Conversely, B. Riley Financial experienced a sharp decline of 5.8%, while Palo Alto Networks saw an increase of 2.7%.

Domestic Market Recap

Indian Market Performance

In India, the stock indices showed a mixed performance on Monday. The Sensex closed down by 12.16 points, or 0.02%, ending at 80,424.68. The Nifty 50 also fell slightly, down by 31.50 points, or 0.13%, to close at 24,572.65. The market exhibited some profit-taking at higher levels amidst mixed global cues.

Expectations for Today

With the Q1 FY25 earnings season concluded, domestic equities are expected to look towards global factors for direction. Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd., predicts that the Nifty 50 may consolidate at higher levels, with sectoral rotation influencing market movements. This week’s focus will be on the FOMC meeting minutes and Fed Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium for insights into future interest rate policies.

Key Global Influences

Gift Nifty

The Gift Nifty, an indicator of market sentiment for Indian stocks, was trading around the 24,655 level today. This represents a premium of approximately 65 points over the Nifty futures’ previous close, signalling a positive opening for the Indian stock market.

China’s Economic Data

China’s decision to keep its benchmark lending rates unchanged was in line with market expectations. The one-year loan prime rate (LPR) remains at 3.35%, and the five-year LPR is steady at 3.85%. This policy move is expected to stabilize the Chinese economy and could have implications for investor sentiment in the region.

Oil Prices

Crude oil prices have declined, reducing concerns about potential supply disruptions in the Middle East. The Brent crude October contract fell by 0.45% to $77.31 per barrel, while US West Texas Intermediate (WTI) crude September futures decreased by 0.50% to $74.00 per barrel. Brent crude had fallen about 2.5% on Monday, while WTI dropped 3%, reflecting easing supply concerns.

Gold Prices

Gold prices have remained above the $2,500 mark, supported by a weaker US dollar and declining Treasury yields. Spot gold increased by 0.1% to $2,505.92 per ounce, approaching its all-time high of $2,509.65 achieved on Friday. US gold futures also rose by 0.1%, reaching $2,543.90.

Currency and Treasury Yields

The US dollar has been trading near a seven-month low, influenced by expectations of a potential rate cut by the US central bank. The dollar index, which measures the US currency against a basket of six major rivals, dropped to 101.82, its lowest level since January 2. The index has declined more than 2% in August and is on track for its second consecutive monthly decrease.

The euro was trading at $1.1080, while the pound remained steady at $1.2985. The Japanese yen strengthened to 146.50 per dollar, nearing a two-week high. In the US Treasury market, yields have decreased across various maturities. The yield on the benchmark US 10-year note fell by 2.8 basis points to 3.864%, the two-year note yield dropped by 0.4 basis points to 4.0618%, and the 30-year bond yield declined by 4 basis points to 4.1114%.

As the Indian stock market prepares for a potentially positive opening, global and domestic factors will play a crucial role in shaping market trends. The favourable performance in Asian and US markets, coupled with stabilizing economic indicators from China, provides a positive backdrop for Indian equities. Investors should keep an eye on upcoming economic events, especially the FOMC meeting minutes and Fed Chair Powell’s speech, which could offer further insights into future monetary policies and influence market direction.

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