AI stocks slide further; Asian markets weak; Indian equities lack momentum; crude oil eases
Despite broadly supportive macro conditions, uncertainty surrounding the proposed trade agreement continues to weigh on Indian markets. Hopes that the Ukraine war may move towards a resolution pushed gold, crude oil and industrial metals lower on Monday.
Stronger exports and a narrower trade deficit should help prevent a further widening of India’s current account deficit. Wholesale price inflation for November came in at minus 0.32 percent, compared with minus 1.21 percent in the previous month.
In GIFT City derivatives trade, Nifty closed at 26,085.00 on Friday night. Early this morning, it slipped to 26,027 before recovering slightly, indicating a negative start for Indian equities today.
India’s merchandise exports rose 19.4 percent in November to $38.10 billion, while imports fell 1.9 percent to $62.66 billion. The merchandise trade deficit narrowed to $24.60 billion. Including services, the overall trade deficit plunged 61 percent to $6.60 billion.
Exports to the US jumped 22.6 percent to $6.98 billion, driven mainly by a 39 percent surge in electronics exports, including smartphones. A sharp 60 percent drop in gold imports was the most notable change on the import side. The export decline seen in October was fully offset in November. Exports to China surged 90 percent to $2.20 billion.
European markets posted solid gains on Monday. However, defence stocks came under pressure after Ukraine announced that it would halt its efforts to join NATO. European Central Bank president Christine Lagarde said conditions could improve European growth prospects. Growth was estimated at 1.2 percent in September.
Concerns over valuations and returns from artificial intelligence investments continued to weigh on US markets. The Nasdaq fell 0.59 percent, while the other two benchmark indices ended marginally lower. Broadcom dropped over 5 percent and Oracle more than 2 percent. AMD, Micron and Microsoft also declined. In contrast, JPMorgan, Bank of America, Wells Fargo, Walmart, Johnson & Johnson and Delta Air Lines touched record highs.
On Monday, the Dow Jones Industrial Average slipped 41.49 points (0.09 percent) to 48,416.56. The S&P 500 fell 10.90 points (0.16 percent) to 6,816.51, while the Nasdaq Composite dropped 137.76 points (0.59 percent) to close at 23,057.41.
US futures were trading lower this morning, with the Dow down 0.07 percent, the S&P 500 off 0.19 percent and the Nasdaq lower by 0.36 percent, as weakness in AI stocks persisted.
US non-farm payroll data for November and retail sales figures for October are due today, while November consumer price inflation data will be released on Thursday.
The continued slide in AI stocks on Wall Street dragged Asian markets lower. Japan’s Nikkei and South Korea’s Kospi each fell about 1 percent. Australia’s ASX initially gained but later slipped into the red. Chinese and Hong Kong indices opened around 1 percent lower after China’s business growth in the previous month came in below expectations.
Although the commerce secretary said a trade deal with the US was nearing completion, markets remained unconvinced. After a sharp fall in early trade, indices managed to close with marginal losses, supported by strong export growth in November. The sharp narrowing of the trade deficit provided some relief. The dollar rose to ₹90.79 before easing to ₹90.73 on the back of this data.
Gains were seen in consumer durables, oil and gas, IT, metals, media, FMCG and public sector banks. Auto, pharma, financials, healthcare and realty stocks ended lower.
Foreign institutional investors continued to sell, offloading a net ₹1,468.32 crore in the cash market. Domestic funds, however, made net purchases worth ₹1,792.25 crore.
On Monday, Nifty fell to 25,904 and Sensex to 84,840 before recovering. The Sensex closed 54.30 points (0.06 percent) lower at 85,213.36, while Nifty slipped 19.65 points (0.08 percent) to 26,027.30. Bank Nifty gained 71.85 points (0.12 percent) to end at 59,461.80. The Nifty Midcap 100 fell 0.12 percent, while the Nifty Smallcap 100 rose 0.21 percent.
Market breadth remained positive. On the BSE, 2,186 stocks advanced and 2,098 declined. On the NSE, 1,657 stocks gained while 1,461 fell. Seventy-nine stocks hit fresh 52-week highs, while 115 touched new lows.
Holding above the 26,000 level remains the key positive for Nifty. A move above the previous close could open the door for a short-term uptrend. Failure to hold may see a retest of support in the 25,700–25,750 zone. Immediate support is seen at 25,935 and 25,900, with resistance at 26,050 and 26,080.
Gold and silver remained volatile on Monday. Gold climbed to $4,345 an ounce before slipping under selling pressure to close at $4,306.30. It moved up to $4,319 this morning before easing slightly. The notional price today is around $4,335.
In Kerala, 22-carat gold rose twice on Monday, gaining ₹1,080 per sovereign to hit a record ₹99,280.
Silver briefly crossed $64 an ounce in spot trade before closing at $63.44. This morning it touched $64.19 before easing to around $63.80.
Platinum was at $1,774, palladium at $1,540 and rhodium at $7,800.
Industrial metals fell on expectations of progress in Ukraine peace talks. Copper slipped 0.35 percent from a six-month high to close at $11,774.15 a tonne. Aluminium fell 0.61 percent to $2,871.60 a tonne. Zinc, nickel, lead and tin also declined.
Rubber rose 0.87 percent in international markets to 173.70 cents per kg. Cocoa climbed to $5,875.43 a tonne, while coffee prices fell 2.04 percent. Tea slipped 0.03 percent and palm oil eased 0.15 percent.
The dollar index slipped from weekend levels to close at 98.31 and edged down to 98.29 this morning.
In currency markets, the euro rose to $1.1748 and the pound to $1.3364. The Japanese yen strengthened to 155.06 per dollar. The Chinese yuan held at 7.05 per dollar, while the Swiss franc rose to 0.7962 per dollar.
US bond prices rose, pushing the 10-year Treasury yield down to 4.168 percent.
The rupee weakened again. On Monday, the dollar touched ₹90.79 before closing at ₹90.73, up 31 paise. The Reserve Bank of India continued its market intervention. Strong export growth and a narrower trade deficit helped prevent a sharper fall, but the near-term bias remains weak.
The Chinese yuan strengthened to ₹12.88.