The crash in the US market has renewed worries about a possible artificial intelligence (AI) bubble. After six straight days of gains, the Indian market is expected to see a weak opening. There is concern that several developments are all linked: large funds and billionaires pulling out of AI-related investments, the rising cost of insuring the debt of AI-linked companies through credit default swaps, and the slump in cryptocurrencies such as Bitcoin as big investors exit riskier assets.
Many are now wondering whether an even sharper market correction could follow. Gold and other precious metals are also falling. Industrial metals, too, have been declining for the last two days.
Exports fell sharply in October, pushing the trade deficit to record levels. US tariffs remain the main problem. Gold imports have tripled and silver imports have risen sixfold, sharply widening the deficit. India has signed an agreement to buy more crude oil and LPG from the US, largely to substitute discounted Russian imports. This, too, is expected to add to the trade deficit. As this move worsens the current account deficit, it could put pressure on the rupee and push its value lower. This view is weighing on market sentiment.
In derivative trading at GIFT City, Nifty closed on Monday night at 26,008.50. On Tuesday morning it slipped to 25,985 before bouncing to 26,015. This indicates that the Indian market is likely to open lower.
Concerns about an AI bubble are shaking European markets for the second straight week. European indices fell by more than 1% again. Shares of Swedish defence company Saab rose after it received a fighter aircraft order from Colombia. Advertising major WPP jumped 11% following reports that private equity giants Apollo Global Management and KKR are exploring a takeover bid.
US markets started Monday with volatility and ended with steep losses. There are growing murmurs that the huge capital being poured into AI is not delivering proportional growth in revenues, and that highly leveraged companies in the sector are starting to struggle. After SoftBank, reports that billionaire Peter Thiel has sold his entire stake in Nvidia also dragged sentiment lower. This was the third consecutive day of declines.
Nvidia will report its results on Wednesday after market hours. Any downgrade in its revenue or profit guidance could trigger a sharp reaction. Walmart will announce its results on Thursday morning, which will be seen as a signal on the strength of the US economy. Thursday’s jobs data will offer further clues on the direction of interest rate policy.
On Monday, the Dow Jones index fell 557.24 points (1.18%) to close at 46,590.24. The S&P index dropped 61.70 points (0.92%) to finish at 6,672.41. The Nasdaq Composite slipped 192.51 points (0.84%) to close at 22,708.08.
On Tuesday morning, futures were trading with small gains. Dow futures were up 0.08%, S&P futures 0.07% and Nasdaq futures 0.08%.
Most Asian markets are sharply lower. The US sell-off, along with tensions between China and Japan, is dragging markets down. Japan’s Nikkei index slumped as much as 2.3%. South Korea’s Kospi fell 1%. Chinese and Hong Kong indices were also in the red.
Favourable conditions helped Indian markets end higher for the sixth straight session on Monday. Bulls had hoped for a record-breaking move, but that did not materialise.
Government officials indicated that an India–US trade deal will be announced soon. India has signed an agreement to buy 2.2 million tonnes of LPG a year from the US, equivalent to about 10% of its annual LPG imports. At the same time, imports of Russian crude have increased in recent days, ahead of sanctions that will restrict purchases from Russian companies after November 21. India has also signed deals to buy crude oil from the US. Russia had been supplying oil at deep discounts; moving away from that will force India to pay higher prices. This, in turn, will worsen both the trade deficit and the current account deficit.
Tata Motors Passenger Vehicles fell 4.75% after weak performance at its British subsidiary JLR. Since the demerger, Tata Motors’ market value has been under pressure. When the Sensex constituents are reshuffled next month, Tata Motors is expected to be replaced by IndiGo. This change may trigger selling from index-linked funds.
On Monday, the Sensex rose 388.17 points (0.46%) to close at 84,950.95. Nifty gained 103.40 points (0.40%) to finish at 26,013.45. Bank Nifty jumped 445.15 points (0.76%) to close at a record 58,962.70. The Midcap 100 index advanced 441.30 points (0.73%) to 61,180.50, while the Smallcap 100 index added 95.10 points (0.52%) to end at 18,347.60.
Although the headline indices rose, the advance–decline ratio in the broader market remained tilted towards declines. On the BSE, 2,011 stocks advanced while 2,300 declined. On the NSE, however, gainers outnumbered losers, with 1,643 stocks up and 1,511 down.
On the NSE, 14 stocks touched 52-week highs while 176 hit 52-week lows. Six stocks hit the upper circuit, while none hit the lower circuit.
Foreign institutional investors were net buyers on Monday. In the cash market, they recorded net purchases of ₹442.17 crore. Domestic funds also turned net buyers, with purchases worth ₹1,465.86 crore.
On Tuesday, there will be block deals in several companies where promoters or private equity investors are selling stakes. Blackstone, which holds 40.1% in Mphasis, will sell 9.5% of its stake. The deal is valued at ₹4,626 crore at a price of ₹2,570 per share, a 4.4% discount to Monday’s close. Three foreign investors in Paytm will sell shares worth ₹1,640 crore at ₹1,281 per share. Bain Capital will sell a 2% stake in Enquiver Pharma for ₹493 crore.
Bulls ended Monday’s session in a buoyant mood. However, the subsequent decline in US markets has sent negative signals. Technical analysts say that after Nifty’s close above 26,000, the support zone has shifted up to 25,850–25,900. They see potential upside towards 26,300–26,400, but expect strong resistance around 26,100. For Tuesday, support for Nifty is seen at 25,940 and 25,900, while resistance is expected at 26,055 and 26,100.
Physics Wallah, which came out with its IPO last week, will list on Tuesday. In the informal market, its shares are trading at a 13% premium, giving investors hope of a strong debut.
At the start of the new week, gold moved lower. The belief in the market that the US Federal Reserve will not cut interest rates is weighing on prices. On Monday, gold prices swung by more than $1,000. After falling from $4,107.70 to $4,005.90, gold closed at $4,046.50 an ounce. On Tuesday morning, it rose to $4,056 before slipping back to $4,026. It later hovered around $4,033.
The holiday settlement price was $4,074.50 an ounce. On Tuesday morning, it was at $4,035.
Silver closed at $50.25 an ounce in the spot market and dipped to $49.84 on Tuesday morning. The holiday settlement price stood at $49.81.
Platinum was quoted at $1,536, palladium at $1,368, and rhodium at $7,675.
Industrial metals saw sharp declines on Monday amid rising doubts about global growth. Copper fell 0.48% to $10,799 a tonne. The market is still assessing the impact of a mining accident in Congo. Aluminium dropped 1% to $2,811.64 a tonne. Nickel, tin, lead and zinc also declined.
In the international market, rubber prices fell 0.58% to 172 cents per kilogram. Cocoa slid 1.10% to $5,228.93 a tonne. Coffee prices rose 0.90%. Tea prices were unchanged. Palm oil climbed 0.63%.
The dollar index rose on Monday to close at 99.59, before easing slightly to 99.54 on Tuesday morning.
The dollar exchange rate was largely stable. The euro slipped to $1.1591 and the pound to $1.3151. The Japanese yen weakened to 155.15 per dollar.
China’s currency declined to 7.11 yuan per dollar, while the Swiss franc stood at $0.796.
The Indian rupee strengthened, with the dollar falling 11 paise to ₹88.63.
US bond prices fluctuated on Monday but ended largely unchanged. The yield on 10-year Treasuries eased to 4.131%.
The resumption of loading at Russian ports on the Black Sea has halted the recent rise in crude oil prices. Brent crude, which closed at $64.04 a barrel on Monday, slipped half a per cent to $63.91 on Tuesday morning. WTI crude traded at $59.63, while UAE’s Murban crude was at $65.53. Natural gas prices fell 4% to $4.33.