Indian stock market: The domestic equity benchmark indices, Sensex and Nifty 50, are anticipated to start lower on Friday amid mixed global signals, with GIFT Nifty trading at a discount of approximately 84 points from Nifty Futures' close on Thursday.
Asian markets experienced limited movement early Friday, as the Federal Reserve's shift towards a more hawkish stance continued to impact US stocks and bonds while strengthening the dollar.
The Indian stock market experienced a significant decline on Thursday, following selling trends observed in major global markets and hints from the US Federal Reserve regarding fewer anticipated rate cuts next year, contrary to expectations of three or four.
Rate cuts by the US typically benefit emerging markets like India by potentially increasing foreign investments. The Fed's more assertive stance has weakened foreign investors' willingness to engage with local stocks, according to two analysts cited in reports.
By the end of the trading day, the Nifty 50 was recorded at 23,951.70, falling by 247.15 points or 1.02 percent, while the Sensex closed at 79,218.05, down 964.15 points or 1.20 percent. This marks the fourth consecutive day that Indian stocks have ended in negative territory.
All sectoral indices on the NSE, including Bank, Auto, Financial Services, FMCG, IT, Media, Metal, PSU Banks, Private Banks, Reality, Consumer Durables, and Oil and Gas, finished in the red.
“The Indian market saw a widespread decline following a global sell-off driven by the US Fed’s hawkish stance on interest rates. Sectors sensitive to interest rates, such as banking and real estate, significantly bore the brunt. However, the BoJ's decision to keep its interest rate steady, which surprised economists, aided in reducing the selling pressure,” said Vinod Nair, Head of Research, Geojit Financial Services.
Here are key global market cues for Sensex today:
Asian stocks experienced limited movement early Friday, following the Federal Reserve's hawkish stance that continued to pressure US equities and bonds while strengthening the dollar, according to bloomberg report.
Shares declined in Australia and South Korea, and futures for Hong Kong equities fell. Japanese stocks saw a slight increase as the yen depreciated. US futures fell after the S&P 500 ended slightly lower on Thursday, heading toward its worst week since September. The Nasdaq 100 decreased by 0.5%.
The mixed outcomes in Asia followed the release of data on Thursday that indicated resilience in the US economy, reducing the urgency for an immediate rate cut.
Gift Nifty was trading around 23,932.00 level, a discount of nearly 89.5 points from the Nifty futures’ previous close, indicating a gap-down start for the Indian stock market indices.
Wall Street equities ended nearly flat on Thursday as Treasury bond yields increased further following a Federal Reserve decision that led to significant sell-offs in the previous session. US indices initially rose during the day, but the recovery dwindled as the yield on the 10-year US Treasury note surpassed 4.5 percent. On Wednesday, the Fed reduced interest rates but indicated it anticipates fewer rate cuts in 2025.
Benchmark US Treasury yields reached their highest levels since May, oil prices decreased, and gold prices increased as investors adapted to the understanding that the central bank will pursue a more gradual and cautious path to policy easing in the upcoming year, according to a Reuters report.
The Dow Jones Industrial Average increased by 15.37 points, or 0.04%, to 42,342.24, while the S&P 500 decreased by 5.08 points, or 0.09%, to 5,867.08, and the Nasdaq Composite fell by 19.93 points, or 0.10%, to 19,372.77.
As reported by Bloomberg, the US economy grew at a quicker rate in the third quarter than initially estimated, largely due to enhanced consumer spending and exports. The Bureau of Economic Analysis released its third estimate showing that gross domestic product rose at an annualized rate of 3.1% for the third quarter, compared to an earlier forecast of 2.8%.
Consumer spending was adjusted upwards to a growth rate of 3.7% from 3.5%. Exports increased by 9.6% between July and September, up from the earlier estimate of 7.5%, with this growth solely attributed to services.
The Bank of England maintained its primary interest rate at 4.75% on Thursday; however, there was greater disagreement among policymakers regarding the necessity of rate reductions to address a slowing economy, as reported by Reuters. Three members of the BoE's nine-member Monetary Policy Committee - Deputy Governor Dave Ramsden along with external members Swati Dhingra and Alan Taylor - cast their votes in favor of a quarter-point decrease to bring the rate down to 4.5%.
IT service provider Accenture exceeded Wall Street's expectations for first-quarter revenue on Thursday, driven by an increase in demand for its services assisting clients with the adoption of AI-driven tools, according to a report by Reuters. The company's stock experienced a 5% rise in premarket trading.
New bookings for the company increased to $18.7 billion in the first quarter, up from $18.4 billion the previous year. Accenture reported first-quarter revenue of $17.7 billion, surpassing analysts' predictions of $17.12 billion, based on data collected by LSEG.
As reported by Bloomberg, requests for unemployment benefits in the US dropped last week following a spike earlier this month, maintaining a pattern of fluctuations that frequently arises during the holiday season. In the week ending December 14, initial claims fell by 22,000 to a total of 220,000. Economists' median prediction in a Bloomberg survey anticipated 230,000 applications.
(With inputs from Agencies)
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