7 things that changed for the stock market overnight - Gift Nifty to robust US retail sales

The Indian stock market indices, Sensex and Nifty 50, are likely to open on a tepid note Wednesday tracking mixed cues from global peers.

The Asian markets traded marginally lower while the US stocks ended mixed overnight as the Treasury yields spike after robust economic data.

The market will also closely monitor the developments in the Israel-Hamas war, with a consensus emerging that the geopolitical risk will not elevate.

On the domestic front, corporate earnings for the second quarter of FY24 will continue to drive investor sentiment.

The frontline equity indices ended higher on Tuesday, snapping their three-day losing run. The 30-share BSE Sensex closed 261.16 points, or 0.39%, higher at 66,428.09, while the NSE Nifty gained 79.75 points, or 0.40%, to end at 19,811.50.

“Given the resilient domestic economy and strong earnings outlook, the positive trend remains intact. Lot of stock-specific action is likely to be seen as we progress into the results season,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Also Read: Day trading guide for today: Six buy or sell stocks for Wednesday —October 18

Here are key domestic and global market cues for Sensex today:

Asian Markets

Asian markets traded lower Wednesday following overnight mixed sentiment from Wall Street and as investors look to key economic data from China.

China will release its third-quarter gross domestic product data and according to a Reuters poll, economists expect the country’s economy to report growth of 4.4%.

MSCI's broadest index of Asia-Pacific shares outside Japan was a shade lower.

Japan’s Nikkei 225 eased 0.1% and the Topix was up marginally. South Korea’s Kospi fell marginally and the Kosdaq dropped 0.15%.

Hong Kong’s Hang Seng index futures were at 17,782, compared with the HSI’s last close of 17,773.34.

Australia’s S&P/ASX 200 was up 0.08%.

Gift Nifty was trading around 19,783 level, against Nifty futures’ previous close of 19,809, indicating a weak start for the Indian benchmark equity indices.

Also Read: Buy or sell: Vaishali Parekh recommends three stocks to buy today — October 18

Wall Street

US stock market indices ended mostly lower on Tuesday as treasury yields rose after robust economic data.

The Dow Jones Industrial Average rose 13.11 points, or 0.04%, to 33,997.65, while the S&P 500 eased 0.43 points, or 0.01%, to 4,373.2. The Nasdaq Composite declined 34.24 points, or 0.25%, to 13,533.75.

Among stocks, Nvidia shares fell 4.7%, while Bank of America gained 2.3%. Lockheed Martin ended 0.2% higher. Goldman Sachs shares declined 1.6%.

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US Retail Sales

US retail sales increased more than expected in September, cementing expectations that economic growth accelerated sharply in the third quarter.

Retail sales rose 0.7% last month. Data for August was revised higher to show sales advancing 0.8% instead of 0.6% as previously reported. Economists polled by Reuters had forecast retail sales rising 0.3% in September. Retail sales rose 3.8% year-on-year in September.

US Treasury yields spike

Robust retail sales data along with solid profit beats from Bank of America and Goldman Sachs added to bets that the US Federal Reserve will keep interest rates higher for longer. This led to a spike in US Treasury yields with the yields on two-year Treasury notes rising to 17-year highs and five-year yields at 16-year peaks.

Two-year yields surged as much as 14 basis points on Tuesday to a 16-year peak of 5.24%, while ten-year yields were back near recent highs at 4.84%.

IMF downgrades growth forecasts for China

The International Monetary Fund (IMF) downgraded its 2023 and 2024 growth forecasts for China, saying its recovery was "losing steam" and citing weakness in its property sector.

The world's second-largest economy is expected to expand by 5% this year and 4.2% next year, down from 5.2% and 4.5% in the IMF's April forecast, the institution said in a regional economic outlook report released on Wednesday.

Read here: China's GDP likely to decline 1.6%: IMF downgrades growth forecasts for China

Nvidia shares plunge

Nvidia said on Tuesday that new US export restrictions will block sales of two high-end artificial intelligence chips it created for the Chinese market and that one of its top-of-the-line gaming chips will also be blocked, Reuters reported. Nvidia shares declined 4.7%.

In a filing late on Tuesday, Nvidia disclosed the impact from the restrictions, which seek to stop Beijing from receiving cutting-edge U.S. technologies to strengthen its military.

Nvidia said two of its modified advanced AI chips - the A800 and H800 - both of which it created for the Chinese market to comply with previous export rules, would be blocked for sale under the new rules, Reuters reported. One of the company's top-of-the-line gaming chips will be restricted, as will the L40S chip, which it announced in August, it said.

Corporate Earnings

Bajaj Finance reported a consolidated net profit of ₹3,550.80 crore in the second quarter of FY24, registering a growth of ₹27.7% from ₹2,780.65 crore in the corresponding quarter of last year.

Net interest income (NII) of the non-banking finance company (NBFC), on a consolidated basis, in Q2FY24 increased by 26% to ₹8,845 crore from ₹7,002 crore, year-on-year (YoY).

Meanwhile, in the US, the second largest lender Bank of America Corp. reported robust earnings for the third quarter on better-than-expected performance of its investment banking and trading divisions.

The bank reported a profit of 90 cents per share in the quarter. Net income jumped 10% at $7.8 billion. Its revenue at the consumer banking unit surged 6% at $10.5 billion. 

(With inputs from Reuters)

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