Indian equity investors are looking forward to another positive trading session on Friday, October 16, following Thursday's sharp rally in benchmark indices. The recovery in US technology and semiconductor stocks, coupled with strong gains across Asian markets, has improved investor sentiment.
Brent crude remains close to $105 a barrel, while a weaker US dollar index raises expectations of further appreciation in the Indian rupee. However, continued foreign institutional selling and the lack of broad-based participation in Thursday's rally remain concerns.
Gift Nifty closed at 23,106 in Thursday night's derivatives trading at GIFT City before slipping to around 23,062 on Friday morning. The trend suggests that Indian equities could open on a positive note.
Asian markets are trading higher, led by South Korea and Japan.
US equities closed higher as selling pressure on AI and semiconductor stocks eased.
The Sensex surged 1,533.72 points on Thursday, while the Nifty gained 374.65 points.
Mid-cap and small-cap stocks declined despite the sharp rise in benchmark indices.
Foreign institutional investors sold equities worth a net ₹5,285.37 crore.
Brent crude is trading around $105.44 a barrel.
The dollar index remains weak, providing support to the Indian rupee.
Gold has retreated slightly after Thursday's strong recovery.
The Closing Auction Session (CAS) mechanism introduced in the Indian equity market has been revised following representations from stockbrokers.
Under the revised framework, continuous trading will continue until 3.30 pm, with the closing auction session taking place afterwards.
The closing price for calculating benchmark indices will again be determined using the volume-weighted average price during the final 30 minutes of continuous trading, as under the earlier system.
The revision addresses a key concern raised by stockbrokers since the introduction of the new mechanism. The changes are scheduled to take effect on December 7.
India's merchandise exports recorded strong growth in September, while slower import growth helped narrow the monthly trade deficit.
Exports increased 23.04% to $44.40 billion, while imports rose 8% to $74.61 billion. Consequently, the merchandise trade deficit narrowed to $30.21 billion.
Gold and silver imports registered sharp declines, while expenditure on crude oil imports increased significantly.
US producer price inflation rose more sharply than economists had expected in September, raising fresh concerns about inflationary pressures. The Producer Price Index (PPI) increased to 6.3%, compared with 5.3% in August. This represents the steepest increase since 2022.
According to Citigroup's assessment cited in the market report, the probability of an interest rate increase in December has risen to 94%.
Despite the stronger-than-expected inflation figures, US equities ended Thursday's session higher as buying interest returned to selected technology stocks.
US stock markets recovered on Thursday as selling pressure on artificial intelligence and semiconductor companies eased.
The improvement in technology stocks helped offset concerns about producer inflation and the outlook for interest rates.
Around 20 leading AI and semiconductor companies, including Nvidia, AMD, Intel and Dell, collectively lost approximately $1 trillion in market value during the week.
Concerns surrounding the financial position of AI cloud infrastructure company CoreWeave contributed to the recent sell-off in technology stocks. Speculation about the company's ability to service its substantial debt obligations unsettled investors.
The concerns intensified following reports that CoreWeave's promoters had sold shares worth approximately $3.3 billion after its IPO.
Nvidia holds approximately 10% of CoreWeave. Nvidia chief executive Jensen Huang subsequently sought to reassure investors about the company's financial and business outlook.
Nvidia has also reportedly reserved a significant portion of CoreWeave's service capacity through 2032. The reassurance helped calm market sentiment.
Dow Jones: 52,177.69, up 556.21 points (1.08%)
S&P 500: 7,744.06, up 25.12 points (0.33%)
Nasdaq Composite: 26,713.03, up 20.16 points (0.08%)
US stock index futures were trading in different directions on Friday morning.
Dow Jones futures gained 32 points, or 0.06%.
S&P 500 futures declined 6 points, or 0.07%.
Nasdaq futures fell 82 points, or 0.27%.
The mixed performance indicates that investors remain cautious despite Thursday's recovery.
Indian companies listed through American Depositary Receipts (ADRs) recorded substantial gains during Thursday's regular trading session in New York.
HDFC Bank and ICICI Bank advanced nearly 4%, while Infosys gained more than 5%.
ADR movements
HDFC Bank: Gained 3.98% during regular trading; subsequently quoted at $23.53
ICICI Bank: Rose 4.14% during regular trading; subsequently quoted at $29.44
Infosys: Advanced 5.66% during regular trading; gained another 0.08% in subsequent trading to $12.14
Wipro: Rose 3.89% during regular trading; subsequently declined 0.53% to $1.86
The gains in banking and IT ADRs could influence sentiment towards these sectors in the Indian market.
Major European stock markets ended Thursday with gains despite weakness in semiconductor shares. Technology companies, including Infineon Technologies, ASML Holding and STMicroelectronics, recorded losses.
The broader market's positive performance suggested that selling pressure was concentrated mainly in selected technology stocks.
Major Asian equity markets recorded broad-based gains on Friday morning, recovering from the previous session's technology-led sell-off.
South Korean chipmakers SK Hynix and Samsung had fallen 10% and 8.73%, respectively, on Thursday. Japan's SoftBank Group, which has substantial investments in technology companies, declined 7.9%. Taiwanese semiconductor stocks also faced significant selling pressure.
However, these markets rebounded on Friday as technology stocks recovered. South Korea's Kospi led the gains, advancing 2.6%, while Japan's Nikkei climbed 1.65%.
Friday morning Asian market trends
South Korea – Kospi: Up 2.60%
Japan – Nikkei: Up 1.65%
Hong Kong – Hang Seng: Up 1.30%
Taiwan: Up 1.00%
Australia: Up 0.75%
China – Shanghai Composite: Up 0.45%
The broad recovery across Asia provides a positive backdrop for the Indian market.
Indian benchmark indices staged one of their strongest rallies in recent months on Thursday, ignoring the sharp declines in several Asian markets.
The Sensex surged more than 1,500 points, while the Nifty gained nearly 375 points. However, the rally was largely restricted to index-heavyweight stocks. Mid-cap and small-cap shares failed to participate, with both segments closing lower.
Buying interest was concentrated in large-cap stocks that carry significant weight in benchmark indices, while mid-cap counters faced substantial selling pressure.
Despite the strong gains in the Sensex and Nifty, declining stocks considerably outnumbered advancing shares on both major exchanges.
BSE: 1,657 stocks advanced, while 2,741 declined.
NSE: 1,333 stocks advanced, while 2,208 declined.
The weak market breadth suggests that the rally lacked broad participation.
The divergence between benchmark performance and the wider market also raises questions about the sustainability of the recovery.
Foreign institutional investors increased their selling in Indian equities on Thursday.
They recorded net sales of ₹5,285.37 crore in the cash market.
Domestic institutional investors, including mutual funds and other financial institutions, made net purchases worth ₹3,319.39 crore.
Although domestic buying provided some support, it was not sufficient to fully offset foreign outflows.
Sensex: 74,315.61, up 1,533.72 points (2.11%)
Nifty 50: 22,997.30, up 374.65 points (1.66%)
Bank Nifty: 55,810.50, up 494.50 points (0.89%)
Nifty Midcap 100: 59,197.25, down 211.85 points (0.36%)
Nifty Smallcap 100: 19,131.70, down 253.10 points (1.31%)
Shares of IDBI Bank declined 8.1% on Thursday to ₹83.07 following the announcement of its proposed stake sale to Fairfax Financial Holdings, controlled by Canadian billionaire Prem Watsa. The reported transaction price for the government's stake is ₹81 per share.
Shares of Kerala-based CSB Bank, in which Fairfax holds a stake of around 40%, declined 3.19%. Fairfax also has substantial investments in two financial services companies belonging to the IIFL Group. Both recorded modest gains during Thursday's session.
Reports suggest that the IIFL financial services businesses could be integrated with IDBI Bank as part of Fairfax's broader financial services strategy.
The developments have also brought the future ownership structure of CSB Bank into focus.
Yes Bank shares declined 14.53% on Thursday following a Supreme Court ruling concerning the write-down of its Additional Tier 1 (AT1) bonds.
The Supreme Court upheld a Bombay High Court decision invalidating the write-down of bonds worth approximately ₹8,415 crore during the bank's reconstruction in 2020. The judgment could create a substantial financial liability for Yes Bank.
The AT1 bonds were written down as part of restructuring measures introduced to rescue the bank without a direct government capital infusion. Affected bondholders subsequently challenged the decision in court.
The Supreme Court's ruling has renewed investor concerns about the potential impact on the bank's financial position.
International gold prices recovered strongly on Thursday as concerns about further US interest rate increases eased. Gold rose $65.30, or 1.59%, to close at $4,171.80 per troy ounce.
However, the metal retreated to around $4,153 in early Friday trading.
In Kerala, the price of 22-carat gold declined by ₹600 per sovereign on Thursday to ₹1,08,120.
Gold market
International gold, Thursday close: $4,171.80 per ounce
Daily change: Up $65.30 (1.59%)
Friday morning price: Around $4,153 per ounce
Kerala 22-carat gold: ₹1,08,120 per sovereign (8 grams)
Kerala daily change: Down ₹600
Silver rose approximately 3.25% on Thursday to close at $51.55 per ounce.
Other precious metals traded at the following levels:
Precious metal prices
Silver: $51.55 per ounce
Platinum: $1,618 per ounce
Palladium: $1,110 per ounce
Rhodium: $8,500 per ounce
International rubber prices declined again, while the market in Kerala continued to strengthen because of a shortage of rubber sheets.
The domestic supply shortage has helped sustain prices despite weakness in overseas markets.
Rubber market
Bangkok RSS 1: $291.10 per quintal
Bangkok RSS 3: $287.70 per quintal
Kerala RSS 4: ₹28,700 per quintal
The price of RSS 4 rubber in Kerala rose to ₹28,700 per quintal on Thursday.
Most industrial metals recorded losses on Thursday amid concerns about the outlook for global interest rates.
Copper declined 1.43% to $14,538.70 per tonne.
Aluminium was the exception, gaining 0.49% to reach $2,994.50 per tonne.
Nickel, lead, tin and zinc also closed lower.
International metal market
Copper: $14,538.70 per tonne, down 1.43%
Aluminium: $2,994.50 per tonne, up 0.49%
Nickel: Lower
Lead: Lower
Tin: Lower
Zinc: Lower
Agricultural commodities recorded mixed movements in international markets on Thursday.
Cocoa prices advanced 1.67% to $5,831 per tonne.
Arabica coffee declined 1.09% to $2.948 per pound, while palm oil fell 2.21% to 4,596 Malaysian ringgit per tonne.
Cocoa: $5,831 per tonne, up 1.67%
Arabica coffee: $2.948 per pound, down 1.09%
Palm oil: 4,596 Malaysian ringgit per tonne, down 2.21%
The US dollar index declined on Thursday to close at 102.05. It edged up slightly to 102.08 on Friday morning but remained relatively weak.
The softer dollar has provided some support to emerging market currencies, including the Indian rupee.
US dollar index: 102.08
Euro: $1.1208
British pound: $1.3266
Japanese yen: 158.14 per US dollar
Chinese yuan: 6.69 per US dollar
US government bond yields also declined on Friday morning.
The yield on the benchmark 10-year Treasury bond fell to 5.094%, while the 30-year Treasury yield eased to 5.425%.
European government bond yields also moved lower.
The decline suggests that concerns about further interest rate increases have moderated to some extent, despite the stronger producer inflation figures.
The rupee strengthened for the fourth consecutive trading session on Thursday.
The dollar declined to ₹94.86 during intraday trading before closing at ₹95.06, representing a fall of 14 paise.
In offshore forward trading on Friday morning, the dollar was quoted around ₹94.75 after touching ₹94.53 earlier.
The weakening dollar index could support further appreciation in the rupee.
US dollar, Thursday close: ₹95.06
Dollar's daily change: Down 14 paise
Dollar, offshore forward market: Around ₹94.75
Chinese yuan: ₹14.21
Euro: ₹106.58
International crude oil prices edged lower on Thursday and continued to decline on Friday morning.
Brent crude closed at $105.92 per barrel on Thursday before slipping to around $105.44 in early Asian trading. West Texas Intermediate crude was quoted at $97.44 per barrel.
Meanwhile, reports indicated that Ukraine had resumed attacks on Russian oil refineries, adding to geopolitical uncertainty in the oil market.
Despite the slight decline, crude prices remain elevated, posing a potential concern for India's import bill, inflation outlook and current account balance.
IBrent crude, Thursday close: $105.92 per barrel
Brent crude, Friday morning: $105.44 per barrel
WTI crude: $97.44 per barrel
Major cryptocurrencies traded higher on Friday morning amid improving global risk sentiment.
Bitcoin climbed above $82,110, while Ether moved past $2,430.
Solana also recovered to trade above $105.
Bitcoin: Above $82,110
Ether: Above $2,430
Solana: Above $105
(October 15, Thursday closing level)s
Sensex: 74,315.61 (+2.11%)
Nifty 50: 22,997.30 (+1.66%)
Bank Nifty: 55,810.50 (+0.89%)
Nifty Midcap 100: 59,197.25 (−0.36%)
Nifty Smallcap 100: 19,131.70 (−1.31%)
Dow Jones: 52,177.69 (+1.08%)
S&P 500: 7,744.06 (+0.33%)
Nasdaq Composite: 26,713.03 (+0.08%)
US dollar: ₹95.06 (−₹0.14)
International gold: $4,171.80 per ounce (+$65.30)
Kerala gold: ₹1,08,120 per sovereign (−₹600)
Brent crude: $105.92 per barrel (−$0.14)
The recovery in global equities, particularly technology and semiconductor stocks, provides a favourable backdrop for Indian markets on Friday.
However, several factors could influence the direction of trading.
Market breadth: A sustained recovery would require stronger participation from mid-cap and small-cap stocks.
Foreign investor activity: Continued selling by foreign institutional investors could restrict market gains.
Large-cap stocks: The recent concentration of buying in index heavyweights makes their performance important for benchmark movements.
Crude oil: Brent remaining above $100 per barrel could add pressure to India's import costs and inflation.
Rupee: A weaker dollar could help the domestic currency extend its gains.
US monetary policy: Inflation data, Treasury yields and interest rate expectations remain important global triggers.
Banking stocks: Developments involving IDBI Bank, CSB Bank and Yes Bank could generate stock-specific volatility.
Although global cues are encouraging, the weakness in India's broader market during Thursday's rally suggests that investors should remain selective. The ability of mid-cap and small-cap stocks to recover, alongside sustained buying in large-cap shares, will be important in determining whether the current rebound develops into a broader market recovery.