Mumbai, 19 October, 2023 – The Indian stock market indices, Nifty 50 and Sensex, are set to open on a cautious note today, in line with the subdued global economic environment. International markets faced downward pressure on Thursday after US Treasury yields spiked to a multi-decade high, amid concerns of prolonged interest rate hikes by the US Federal Reserve.
The Asian markets followed this sentiment, with significant declines across the board. Meanwhile, the US markets ended in the red on Wednesday, further contributing to the cautious outlook. These market moves came as tensions flared in the Middle East due to the Israel-Hamas conflict, adding to the risk aversion trade strategy. In the midst of this economic turbulence, investors are keeping a close eye on corporate earnings to gauge future market direction.
On Wednesday, the Indian equity markets experienced substantial selling pressure, leading to both the benchmark indices ending in negative territory. The 30-share BSE Sensex closed at 65,877.02, down 551.07 points, marking a decline of 0.83%. The NSE Nifty 50 settled at 19,671.10, declining 140.40 points, or 0.71%.
Vinod Nair, Head of Research at Geojit Financial Services, commented on the market dynamics, “Profit booking ensued in Indian markets, spurred by weak global sentiments and escalating Middle East tensions. A sudden rise in the tension has led to instability in energy prices. While the US bond yields were cautiously placed, awaiting the Fed chair’s speech. The initial Q2 earnings disappointments by the IT & financials sector may have prompted attention in the domestic markets.”
Nair added that these recent events are seen as knee-jerk reactions, as the overall outlook for the domestic market remains stable. This is underpinned by a positive Q2 result forecast and a favorable fiscal position.
Key Market Cues for Sensex Today:
Asian Markets:
- Asian markets are trading lower, following the overnight losses on Wall Street, as US Treasury yields have surged to multi-year highs.
- Australia’s S&P/ASX 200 traded 1.33% lower.
- Japan’s Nikkei 225 declined 1.42%, while the Topix fell 1.18%.
- South Korea’s Kospi plunged 1.62%, and the Kosdaq dropped 2.22%.
- Hong Kong’s Hang Seng index futures were lower at 17,569, compared with the HSI’s close of 17,732.52.
- Gift Nifty was trading around 19,568 levels, indicating a weak start for the Indian benchmark indices.
Wall Street:
- US stock market indices ended significantly lower on Wednesday as Treasury yields rose, and concerns over the Middle East conflict led to risk aversion.
- The Dow Jones Industrial Average dropped 332.57 points, or 0.98%, to 33,665.08.
- The S&P 500 declined 58.6 points, or 1.34%, to 4,314.6.
- The Nasdaq Composite ended 219.45 points, or 1.62%, lower at 13,314.30.
Amid these market developments, it’s worth noting that various stocks experienced significant movements. Procter & Gamble shares gained 2.6%, while United Airlines Holdings shares plunged 9.7%. Morgan Stanley shares ended 6.8% lower, with Tesla shares down 4.8%, and Netflix shares closing 2.7% lower.
In the global context, US single-family housing starts rebounded significantly in September, driven by demand for new construction. Japan recorded a trade surplus as exports rose in September, indicating positive economic dynamics. US Treasury yields surpassed 4.9%, reflecting concerns about future interest rate hikes.
Furthermore, Walt Disney has announced a restructuring of its financial reporting, which will now distinguish between sports and entertainment segments. This change will provide investors with a more detailed view of the company’s financial performance in these areas.
As global market dynamics remain volatile, traders and investors are advised to remain vigilant and closely monitor both domestic and international cues to make informed decisions.
