- India’s Nifty and Sensex snapped opening gains to resume the pullback on Thursday.
- On Wednesday, Nifty corrected from all-time high above 22,200, Sensex failed to sustain above 73,000.
- India’s PMI came in mixed, focus shifts to US PMIs data and RBI Minutes.
The Sensex 30 and Nifty 50, India’s key benchmark indices, resumed their corrective decline on Thursday, erasing the opening gains.
Indian indices slipped despite the optimism in the Asian stock markets, courtesy of the encouraging earnings report from the American tech-giant Nvidia. Japan’s Nikkei 225 index hit a record high above 39,000
Mixed Indian preliminary business PMI data also failed to lift the sentiment around Nifty and Sensex.
At the time of writing, the National Stock Exchange (NSE) Nifty 50 is edging 0.55% lower on the day to 21,934.75 in early trades while the Bombay Stock Exchange (BSE) Sensex 30 is also down 0.55% at 72,222.93.
Stock market news
- Early Thursday, top gainers on Nifty were Eicher Motors, Wipro, HCL Tech, Axis Bank and Hindalco. Meanwhile, HDFC Life Insurance, Bharti Airtel, Grasim, Titan and BPCL are seen as the main losers.
- Data published by HSBC Bank showed on Thursday that India’s Manufacturing Purchasing Managers’ (PMI) Index dropped from 56.9 in January to 56.7 in February. Meanwhile, the Services PMI rose to 62.0 in the same period vs. 61.8 previous. The Composite PMI stood at 61.5, as against the previous reading of 61.2.
- Jefferies expects the Indian stock market to hit $10 trillion by 2030
- Among the corporate news, SpiceJet raised ₹316 crore, bringing the total funds raised to ₹1,060.
- The US stock markets saw a mixed close on Wednesday.
- Nvidia released Q4 earnings after the close on Wednesday. Nvidia posted $5.16 earnings per share (EPS) vs. $4.64 expected while revenue stood at $22.10 billion vs. $20.62 billion expected. The AI pioneer said that it expected $24.0 billion in sales in the current quarter.
- The Fed Minutes stated, “most participants noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2 percent.”
- Markets are currently pricing in just about a 30% chance that the Fed could begin easing rates in May, much lower than an over 80% chance a month ago, according to the CME FedWatch Tool. For the June meeting, the probability for a rate cut now stands at 70%, down from 77% seen a day ago.
- People’s Bank of China (PBoC) cut the five-year Loan Prime Rate (LPR) by a record 25 bps from 4.20% to 3.95%. The PBOC rate cut failed to excite traders on Tuesday.
- Attention now turns toward the Minutes of the RBI meeting, preliminary PMI data from the United States due later on Thursday.
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
Source: https://www.fxstreet.com/news/stock-market-today-nifty-and-sensex-set-to-open-higher-pmis-in-focus-202402220235