The Indian stock market benchmark indices, Sensex and Nifty 50, are anticipated to commence trading on a flat note this Wednesday, mirroring subdued global market signals. Despite this, domestic investor sentiment remains buoyant following the announcement of the landmark India-US trade agreement, with market participants eagerly awaiting the comprehensive details of this pivotal pact.
Domestic Market Performance and Outlook
On Tuesday, the Indian equity markets concluded with remarkable gains, propelled by the positive news surrounding the India-US trade deal. The Sensex skyrocketed by 2,072.67 points, equivalent to a 2.54% increase, settling at 83,739.13. Simultaneously, the Nifty 50 index advanced by 639.15 points, or 2.55%, closing at 25,727.55.
Siddhartha Khemka, Head of Research for Wealth Management at Motilal Oswal Financial Services Ltd., provided an optimistic perspective, stating, "We expect Indian markets to witness continued positive momentum in the near term, with sector and stock-specific action, driven by recent trade deals with the US and EU, Union Budget announcements, and the ongoing Q3 earnings season."
Global Market Cues Influencing Indian Indices
Asian Markets
Asian equity markets displayed a mixed performance on Wednesday, largely influenced by overnight declines on Wall Street. Japan's Nikkei 225 index dropped by 1.2%, and the Topix index decreased by 0.39%. In contrast, South Korea's Kospi index rose by 0.4%, while the Kosdaq index surged by 1.01%. Futures for Hong Kong's Hang Seng index suggested a lower opening.
Gift Nifty Indications
The Gift Nifty was trading at approximately 25,824, reflecting a marginal premium of nearly 7 points compared to the previous close of Nifty futures. This indicates a potentially flat commencement for the Indian stock market indices.
Wall Street Performance
US stock markets ended significantly lower on Tuesday, primarily due to a sell-off in technology stocks. Concerns about artificial intelligence intensifying competition for software manufacturers contributed to the downturn. The Dow Jones Industrial Average fell by 0.34% to 49,240.99, the S&P 500 declined by 0.84% to 6,917.81, and the Nasdaq closed 1.43% lower at 23,255.19.
Notable technology stocks experienced substantial losses: Nvidia's stock price decreased by 2.84%, Microsoft shares fell by 2.87%, Meta Platforms stock declined by 2.08%, Alphabet's share price dropped by 1.22%, and Amazon shares retreated by 1.79%. Additionally, Salesforce, Datadog, and Adobe shares lost approximately 7%, Synopsys and Atlassian fell around 8%, and Intuit plummeted by 11%.
Key Developments Impacting Markets
India-US Trade Deal Progress
Union Commerce and Industry Minister Piyush Goyal announced that the India-US trade deal is in the final stages of detailing between the negotiating teams. He emphasized that India has secured more favorable trade terms than its competitors and assured that sensitive sectors, particularly agriculture and dairy, have been thoroughly protected.
Geopolitical Tensions: US-Iran Incident
In a development with potential market implications, the US military reported shooting down an Iranian Shahed-139 drone that approached the Abraham Lincoln aircraft carrier in the Arabian Sea. The drone was deemed to be flying "aggressively" with "unclear intent" and was intercepted by an F-35 US fighter jet.
Corporate Investment: Nvidia-OpenAI Deal
Nvidia is reportedly close to finalizing a deal to invest $20 billion in OpenAI as part of its latest funding round. OpenAI, the creator of ChatGPT, aims to raise up to $100 billion, which would value the company at approximately $830 billion.
Economic Indicators: Japan Services PMI
Japan's services sector exhibited robust growth, with activity expanding at its fastest pace in nearly a year. The overall private sector recorded its quickest growth in 32 months. The S&P Global final Japan Services Purchasing Managers' Index increased to 53.7 in January from 51.6 in December, marking ten consecutive months of expansion and slightly surpassing the preliminary reading of 53.4.
Commodity and Cryptocurrency Movements
Precious Metals
Gold prices stabilized after surging more than 6% in the previous trading session. The price of gold remained largely unchanged at $4,944.66 per ounce, while silver prices edged down by 0.8% to $84.48.
Crude Oil Prices
Crude oil prices extended their gains for a second consecutive day, driven by escalating geopolitical tensions between the US and Iran. Brent crude oil price rallied by 1.55% to $67.33 per barrel, and US West Texas Intermediate crude futures increased by 1.04% to $63.87.
Bitcoin Performance
Bitcoin prices declined to their lowest level since Donald Trump resumed the US presidency over a year ago. The cryptocurrency fell by as much as 7% to $72,877 on Tuesday, its lowest since November 6, 2024, before recovering slightly to trade at $75,800 early Wednesday. Bitcoin has depreciated by approximately 13% year-to-date.
