The stock market is expected to start the day on a lower note, mirroring weak global cues that followed an overnight selloff in the US equities. Investors’ sentiment has been dampened by apprehensions that interest rates might remain elevated for a more extended period.
Domestic Scene and Previous Session Recap
On Tuesday, Indian markets were closed in observance of Independence Day. In the previous trading session, domestic benchmark indices exhibited a subdued performance. The Sensex managed a modest gain of 79.27 points or 0.12%, closing at 65,401.92. The Nifty50 experienced a marginal rise of 6.25 points or 0.03%, concluding at 19,434.55.
Key Points to Consider Before Market Opening
- Asian Markets’ Performance: Asian markets are trending lower due to the ripple effect of the US selloff. Japan’s Nikkei 225 and Topix slipped by 0.82% and 0.68% respectively. South Korea’s Kospi retreated 1.03%, while the Kosdaq registered a loss of 1.18%. Hong Kong’s Hang Seng index futures were trading lower at 18,360, compared to the previous close of 18,581.11. Australia’s S&P/ASX 200 was down 1.20%.
- Gift Nifty and Nifty Futures: Gift Nifty is trading at 19,365.50, lower than the Nifty futures’ Monday closing of 19,471.20. This suggests a weak opening for the Indian benchmark indices.
- US Stock Indices Decline: US stock indices witnessed significant declines after stronger-than-expected retail sales data raised concerns of prolonged higher interest rates. The S&P 500 fell 1.16% to close at 4,437.86, dipping below its 50-day moving average for the first time since March. The Nasdaq slipped 1.14% to 13,631.05, and the Dow Jones Industrial Average dropped 1.02% to 34,946.39.
- Banking Stocks’ Performance: Banking stocks faced a decline following a report indicating that ratings agency Fitch might downgrade multiple US banks. JPMorgan Chase share price decreased by 2.5%, Bank of America shares declined by 3.2%, and Wells Fargo dropped 2.3%.
- Inflation in India: India’s consumer price index (CPI) inflation surged to a 15-month high of 7.44% in July 2023, largely driven by elevated food and vegetable prices. This inflation reading breached the Reserve Bank of India‘s (RBI) upper tolerance limit of 6% for the first time in five months.
- Michael Burry’s Position: Money manager Michael Burry held bearish options against the broad S&P 500 and Nasdaq 100 Index at the end of the second quarter. His Scion Asset Management purchased put options with a notional value of $739 million against the Invesco QQQ Trust ETF and $886 million against the SPDR S&P 500 ETF.
Conclusion
The Indian stock market is poised to open on a cautious note, in sync with global market trends and concerns over interest rate scenarios. As market participants analyze the impact of external factors, they remain watchful for potential movements and developments that could shape the day’s trading session.
Disclaimer: The information provided here is for informational purposes only and should not be construed as investment advice. Always consult with financial professionals before making investment decisions.