Indian stock market: 10 key things that changed for market over weekend - Gift Nifty, Nikkei’s slump to Nasdaq sell-off

Indian stock market: The domestic equity benchmark indices, Sensex and Nifty 50, are expected to open lower on Monday following a sharp sell-off in the global markets.

Asian markets traded lower, while the US stock market ended with heavy losses last week amid rising concerns of a US recession after weak jobs data stoked fears that the economy was slowing more rapidly than anticipated.

Expectations for an interest rate cut of 50 basis points (bps) at the US Federal Reserve’s September meeting jumped to 71% from 22% in the prior session, according to CME’s FedWatch Tool.

On Friday, the Indian stock market benchmark indices ended over a percent lower each dragged by profit booking amid weak global market cues.

The Sensex plunged 885.60 points, or 1.08%, to close at 80,981.95, while the Nifty 50 settled 293.20 points, or 1.17%, lower at 24,717.70.

“The Indian market is showing signs of fatigue at higher levels, as most positive factors have already been priced in. Subdued Q1FY25 earnings and stretched valuations are not reassuring investors. The chances of further consolidation seem elevated due to premium valuations, weak Q1 results, and ongoing global market consolidation,” said Vinod Nair, Head of Research at Geojit Financial Services.

This week, investors will eye the upcoming Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) meeting, the next set of Q1 results, Israel-Iran conflict, flow of foreign funds and other key domestic and global cues that will drive the Indian stock market momentum.

Here are key global market cues for Sensex today:

Asian Markets

Asian markets extended the sell-off on Monday following a slump in the US stock market last week. MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.8%, while Japan’s Nikkei shed another 6.4% to hit seven-month lows.

Japan’s Nikkei 225 and Topix plunged around 7% each. South Korea’s Kospi declined 3.9%, while the Kosdaq dropped 3.5%. Hong Kong Hang Seng index futures indicated a lower opening.

Gift Nifty Today

Gift Nifty was trading around 24,388 level, a discount of nearly 310 points from the Nifty futures’ Friday close, indicating a sharply negative start for the Indian stock market indices.

Wall Street

US stock market ended lower for a second straight session on Friday, and the Nasdaq Composite confirmed it was in correction territory, amid fears of an oncoming recession.

The Dow Jones Industrial Average declined 610.71 points, or 1.51%, to 39,737.26, while the S&P 500 slumped 100.12 points, or 1.84%, to 5,346.56. The Nasdaq Composite ended 417.98 points, or 2.43%, lower at 16,776.16.

Amazon shares fell 8.79% and Intel stock price plunged 26.06%. Apple share price rose 0.69%.

US stock futures declined further. The Dow Jones Industrial Average futures dropped by 300 points, or 0.8%, while the S&P 500 futures and Nasdaq-100 futures declined 1.1% and 1.7%, respectively.

Nonfarm Payrolls

US nonfarm payrolls increased by 114,000 jobs last month, well below the 215,000 jobs per month added over the last 12 months. Economists polled by Reuters had forecast payrolls would advance by 175,000 jobs. The data also showed the economy created 29,000 fewer jobs in May and June than previously reported.

US Unemployment

US unemployment rate jumped to near a three-year high of 4.3% in July from 4.1% in June, marking the fourth straight monthly increase, amid a significant slowdown in hiring.

US Recession Fears

Goldman Sachs Group Inc. economists increased the probability of a US recession in the next year to 25% from 15%, but said there are several reasons not to fear a slump even after unemployment jumped, Bloomberg reported.

Middle East Tensions

Geopolitical tensions in the Middle East escalated with fears that Iran would attack Israel in retaliation to the killings of Hamas chief Ismail Haniyeh and Hezbollah military chief Fuad Shukr. The US is deploying additional military might in the Middle East as a defensive measure with an aim to de-escalate the tensions in the region.

Dollar, Treasury Yields

The US dollar dropped to a four-month low and the Treasury yields also declined on Friday after a weaker-than-expected employment report for July raised hopes of a Fed rate cut.

The dollar index was down 1% at 103.21 and got as low as 103.12, the lowest since March 14. It is the largest one-day percentage drop since November. Japan’s yen hit mid-January highs against the dollar on Monday. The safe-haven yen traded at 145.43, up 0.8% versus the dollar, after hitting a mid-January peak of 145.28 in early deals.

Treasury yields also tumbled, with two-year yields dropping as low as 3.845%, the lowest since May 2023, and benchmark 10-year yields reaching a low of 3.77% for the first time since mid-2023.

Japan PMI

Japan’s service-sector activity returned to growth in July. The final au Jibun Bank Service purchasing managers’ index (PMI) rose to 53.7 last month, from 49.4 in June.

Oil Prices

Crude oil prices hovered at eight-month lows on Monday. Brent crude futures declined 0.29% to $76.59 a barrel, while US West Texas Intermediate crude futures fell 0.42% to $73.21 a barrel.

(With inputs from Agencies)

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