Indian market eyes US surge as Adani crisis and FIIs selling continue

The Indian market will likely try to follow the surge seen in the US markets yesterday, after the Adani group crisis settled down. However, if foreign investors continue to sell heavily, as they did on Thursday, the market could fall again. Domestic institutional investors and mutual funds are expected to buy in large quantities, which may provide some support.

In the derivatives market, the GIFT Nifty closed at 23,457 on Thursday night, but fell slightly to 23,450 this morning, indicating that the Indian market could start with a modest gain today.

Global markets

On Thursday, the US market showed mixed movement. The Dow Jones surged, while the S&P 500 and Nasdaq both saw slight increases. The rise in the Dow was driven by banks, retail chains, and large machinery manufacturers, with the belief that Trump's policies will benefit these sectors.

Nvidia, which exceeded expectations, warned of lower growth in the fourth quarter, causing its stock to drop in the morning. However, it closed up by half a percent. Meanwhile, Alphabet and Amazon both fell, partly due to concerns over the government's efforts to break up Google.

The Dow Jones Industrial Average gained 46.19 points (1.06%) to close at 43,870.40. The S&P 500 rose by 31.60 points (0.53%) to finish at 5,948.71, and the Nasdaq Composite rose 6.28 points (0.03%) to close at 18,972.40. 

US 10-year Treasury yields rose to 4.416%, with the market continuing to expect high interest rates in the near future.

European markets were also up on Thursday, and Asian markets followed suit today, with Japan's Nikkei rising by 0.85%.

Indian market

The Indian market faced turbulence due to the Adani group's issues on Thursday. After a sharp decline in the morning, the market managed to recover some of its losses. The Sensex bounced back by 355 points from a low of 76,802.73, and the Nifty gained 86 points from its low of 23,263. Despite this, both the Sensex and Nifty ended the day lower by 0.72%, with midcap and smallcap indices seeing smaller losses.

On Thursday, the broader market's up-and-down ratio tilted towards declines, with 2,410 stocks advancing on the BSE and 1,559 declining. On the NSE, 828 stocks advanced while 2,010 fell.

The Nifty closed down 168.60 points (0.72%) at 23,349.90, while the Sensex ended 422.59 points (0.54%) lower at 77,155.79. The Bank Nifty closed 0.50% lower at 50,372.90. The Midcap index fell by 0.30%, and the Smallcap index was down by 0.46%. 

Most sectors ended in the red, except for real estate, IT, and private banks. Public sector banks were among the hardest hit, as concerns grow over their loans to the Adani group.

Foreign investors sold shares worth Rs 5,320.68 crore in the cash market on Thursday. Domestic investors and institutions, however, bought shares worth Rs 4,200.16 crore.

Shares of Federal Bank reached a record high of Rs 211.44, up by 2.01%, while South Indian Bank saw a 2.09% drop to Rs 22.45. Kitex Garments shares rose by another 5%, closing at Rs 667.05. Cochin Shipyard fell by 4.67% to Rs 1,296.90.

Charts indicate that the Nifty index remains bearish. If it continues to fall today, it may test the 23,200 level. If it rises, resistance is seen at 23,500-23,550, with support at 23,280 and 23,225.

The Adani group faced significant losses on Thursday, with shares falling by up to 23.4%. The group’s market value dropped by Rs 2.23 lakh crore, and Adani’s personal wealth decreased by Rs 1.02 lakh crore. Adani fell from 22nd to 25th place on the list of the world’s richest people.

The market is assessing that the Adani group's issues could be resolved through a settlement with US authorities. However, a settlement may limit the group’s ability to raise funds from American investors in the future, which could affect its business growth. A bond sale of $600 million was cancelled, and Kenya also cancelled two contracts with the group.

The group has been aware of US investigations since 2022, with the FBI seizing mobile phones from Adani’s nephew’s office in 2023. Adani Green Energy had mentioned these investigations in its bond prospectus.

Shares of GQG Partners, the investment firm that supported Adani's stock last year, were highly volatile. The firm’s shares fell by 26% on Thursday but later recovered somewhat. GQG Partners has invested about 10% of its assets in the Adani group and has said it will review its portfolio in light of the new allegations.

Gold update

Gold prices are rising again, driven by factors like the Ukraine war. Gold has increased by $110 per ounce this week, closing at $2,669.70 on Thursday, and reaching $2,678 this morning. In Kerala, gold prices increased by Rs 240 per ounce to Rs 57,160.

Silver prices fell to $30.75 per ounce, while the dollar strengthened. The dollar index rose to 106.97 on Thursday and was at 107.03 this morning. The rupee weakened, closing at Rs 84.49 against the dollar, up by 8 paise.

Crude oil prices also rose, with Brent crude increasing by 2% on Thursday to $74.37, and reaching $74.40 this morning. WTI crude stood at $70.28, and UAE's Murban crude was at $73.59.

Cryptocurrencies are seeing record highs, with Bitcoin approaching $100,000. It hit a peak of $99,046.94 on Thursday before dropping to $98,800. Ether also rose to $3,389.90. The surge was partly triggered by the announcement that SEC Chairman Gary Gensler would step down in January, which is expected to benefit the crypto market under Trump's policies.

Most industrial metals fell on Thursday, with copper down by 0.25% at $8,945.05 per tonne, and aluminum down by 0.11% at $2,630.55 per tonne. However, zinc, nickel, lead, and tin saw slight gains.

Market indicators

-Sensex 30: 77,155.79 (-0.54%)
- Nifty 50: 23,349.90 (-0.72%)
- Bank Nifty: 50,372.90 (-0.50%)
- Midcap 100: 54,385.35 (-0.30%)
- Smallcap 100: 17,596.60 (-0.46%)
- Dow Jones: 43,870.40 (+1.06%)
- S&P: 5,948.71 (+0.53%)
- Nasdaq: 18,972.40 (+0.03%)
- Dollar($): ₹84.49 (+₹0.08)
- Dollar Index: 106.97 (+0.29)
- Gold (ounce): $2,669.70 (+$19.10)
- Gold (pound): ₹57,160 (+₹240)
- Crude (Brent) Oil: $74.37 (+$1.25)