Before Market Opens: Indian markets are likely to open on a negative note on Wednesday extending losses from the massive crash in the previous sessions as the election race was tighter than expected and the Modi-led NDA did not win as many seats as predicted by the Exit polls. Meanwhile, Gift Nifty was also trading 39 points lower, indicating a weak start for benchmark Nifty. Let's take a look at some key cues before the market opens today:
The US stock market ended higher on Tuesday after softer labor market data increased bets of an US Fed rate cut. The Dow Jones Industrial Average gained 140.26 points, or 0.36%, to 38,711.29, while the S&P 500 rose 7.94 points, or 0.15%, to 5,291.34. The Nasdaq Composite ended 28.38 points, or 0.17%, higher at 16,857.05.
Asian stocks rose on Wednesday, while the dollar was steady as a softening U.S. labour market firmed up bets of an interest rate cut in September from the Federal Reserve ahead of a crucial payrolls report this week. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.24%, while the Nikkei fell 1% as the Japanese yen flirted with two-week highs. China stocks were mixed, with the blue-chip CSI300 index little changed in early trading, while Hong Kong's Hang Seng index rose 1%. Meanwhile, Nikkei 225 index was down 0.56 percent, or 219.16 points, at 38,618.30 in early trade, while the broader Topix index was down 0.66 percent, or 18.48 points, at 2,769.00.
The Lok Sabha election results of 2024 have delivered a mixed bag for the Indian political landscape and its stock market. Despite the BJP-led National Democratic Alliance (NDA) securing around 295 seats, which is comfortably above the 272-seat threshold required to form the government, the ruling BJP has fallen short of a full majority. This result has generated negative sentiment in the stock market due to the anticipated challenges that might arise from a diminished mandate. However, Prime Minister Narendra Modi is set to return for a historic third consecutive term, although with a lower margin of victory. The reduced majority may lead to potential policy instability, affecting investor confidence in the short term.
On Tuesday, the Indian stock market suffered a massive selloff after the Lok Sabha election result trends fell short of what the exit polls had predicted, spooking investors. The Sensex crashed 4,389.73 points, or 5.74%, to close at 72,079.05, while the Nifty 50 settled 1,379.40 points, or 5.93%, lower at 21,884.50.
At 8:15 am, Gift Nifty was trading 39.5 points or 0.18 percent higher at 22,061, indicating a negative opening for the Indian markets.
Crude oil prices extended losses for the sixth consecutive session after builds in US crude and fuel stockpiles. Brent crude futures fell 0.14% to $77.41 a barrel, while US West Texas Intermediate crude futures declined 0.23% to $73.08 a barrel.
Gold prices inched lower on Wednesday as the dollar firmed, while investors focussed on the U.S. non-farm payrolls report due later in the week for more cues on the Federal Reserve's rate-cut plans. Spot gold was down 0.1% at $2,326.08 per ounce, as of 0122 GMT, after a 1% loss on Tuesday. U.S. gold futures edged down 0.1% to $2,345.80.
The rupee tumbled 45 paise to close at 83.59 (provisional) against the US dollar on Tuesday as the ruling BJP is unlikely to muster an absolute majority in the Lok Sabha elections. Besides, a massive sell-off in domestic equities and a strong greenback against major currencies overseas added to the gloom, forex traders said. At the interbank foreign exchange market, the local unit opened weak at 83.25 and oscillated between a high of 83.23 and a low of 83.59 against the greenback during the session. The domestic currency finally closed at 83.59 (provisional) against the dollar, registering a fall of 45 paise from its previous close.
On Tuesday, Foreign institutional investors (FIIs) net sold Indian shares worth ₹12,436.22 crore, while Domestic Institutional Investors (DIIs) net sold shares to the tune of ₹3,318.98 crore, as per provisional data available on the exchanges.
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