Thursday, May 23, 2024

ALERT! Indian Stock Market Poised for Big Move – Here’s What You Need to Know

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Mumbai, April 5th, 2024 – Indian equity markets kicked off Friday’s session on a bearish note, mirroring the weakness witnessed across global peers. The Nifty 50 and Sensex indices were poised for a gap-down opening, succumbing to the overnight sell-off on Wall Street spurred by hawkish comments from Federal Reserve officials.

The SGX Nifty, an Indian derivative traded on the Singapore Exchange that offers a preview into the NSE Nifty’s performance, hinted at a challenging start. Quoting around 22,556 levels during the early hours, the Nifty futures indicated a nearly 55-point discount from its previous close, signaling turbulence ahead.

Adding fuel to the fire were soaring crude oil prices, with the global benchmark Brent crude surpassing the $90 per barrel mark for the first time since last October. This surge came on the heels of escalating geopolitical tensions in the Middle East region.

The overnight slump on Wall Street followed comments from several Federal Reserve policymakers who expressed reluctance to trim interest rates soon. Minneapolis Fed President Neel Kashkari remarked that continued stalling of inflation could prompt the central bank to reconsider the two rate cuts penciled in for this year.

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“If we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all,” Kashkari stated in an interview, diverging from the Fed’s projection last month.

Richmond Fed President Thomas Barkin echoed similar sentiments, emphasizing the need for broader-based cooling of price pressures before considering rate reductions.

Traders now await the crucial US monthly jobs report due later today, which could offer further insights into the labor market’s resilience and inflationary dynamics.

Closer to home, investors braced for the Reserve Bank of India’s (RBI) monetary policy decision, slated for release after market hours. Expectations leaned towards a pause in rate hikes, with projections of a potential rate cut in the second half of the fiscal year.

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On the economic front, the US trade deficit widened for a second consecutive month in February, climbing 1.9% to $68.9 billion as imports outpaced exports. However, this data release garnered less attention amidst the market’s preoccupation with the Fed’s policy stance.

Unpacking the broader market context, Asian bourses traded lower on Friday, succumbing to the downbeat mood that permeated global equities. Japan’s Nikkei 225 and Topix indices declined over 1.5% and 1.1%, respectively, while South Korea’s Kospi and Kosdaq shed around 0.8% each.

Back home, the benchmark Nifty 50 index had consolidated within a narrow range over the past few sessions, even as the broader markets staged a remarkable recovery from their recent correction. However, the overnight sell-off and hawkish Fed rhetoric threatened to disrupt this equilibrium.

Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd., maintained a positive outlook on the Indian markets. “We expect some volatility today, especially in the rate-sensitive sectors amid India’s central bank’s policy meeting,” he remarked. “Overall, we maintain our positive bias on the market, and any dip can be viewed as a buying opportunity.”

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While the RBI’s decision remained the focal point for domestic investors, global cues continued to exert significant influence. The interplay between the Fed’s policy trajectory, inflationary pressures, and geopolitical dynamics promised to keep markets on their toes in the days ahead.

As the trading day unfolded, market participants braced for heightened volatility, with sectors sensitive to interest rates and commodities poised to experience turbulence. Nevertheless, seasoned investors remained cautiously optimistic, perceiving dips as potential entry points into a market that had demonstrated remarkable resilience despite global headwinds.

The stage was set for an eventful Friday, as the Indian stock markets grappled with the twin challenges of hawkish central bank rhetoric and soaring energy prices – a test of their mettle in an increasingly uncertain global landscape.

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Mezhar Alee
Mezhar Alee
Mezhar Alee is a prolific author who provides commentary and analysis on business, finance, politics, sports, and current events on his website Opportuneist. With over a decade of experience in journalism and blogging, Mezhar aims to deliver well-researched insights and thought-provoking perspectives on important local and global issues in society.

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