Global financial markets enter a crucial week dominated by central bank interest rate decisions, geopolitical tensions, rising crude oil prices and political developments in Europe and the Americas. Despite mounting uncertainties, investors remain cautiously optimistic.
Brent crude oil climbed to nearly $117 a barrel before easing slightly on Monday morning. Although higher energy prices have intensified inflation concerns, markets expect the US Federal Reserve and the European Central Bank (ECB) to leave interest rates unchanged at their meetings this week.
Gold, meanwhile, has slipped below $4,000 an ounce as investors weigh the possibility of interest rates remaining elevated for longer.
Geopolitical uncertainty continues to cloud the outlook. The US and Israel have warned of possible renewed military action against Iran after the November 3 US midterm elections. Iran has threatened to expand the conflict if further attacks occur.
Despite these warnings, crude oil prices have retreated from their recent highs.
GIFT Nifty, which closed at 22,535.50 on Friday night, climbed to 22,597 in early Monday trading before giving up some gains. The movement suggests that Indian equities could open marginally higher.
US President Donald Trump's political allies suffered setbacks in elections held in Serbia and Brazil on Sunday.
In Brazil, President Luiz Inácio Lula da Silva secured re-election, defeating right-wing Senator Flávio Bolsonaro. The result represents a political setback for Trump, whose administration has sought closer ties with conservative political forces in Latin America.
Attention will now shift to Israel's elections on Tuesday, where Trump is supporting Prime Minister Benjamin Netanyahu.
The US Federal Reserve and the European Central Bank are scheduled to review monetary policy this week. Analysts largely expect both institutions to keep their benchmark interest rates unchanged.
The Federal Reserve will announce its decision on Wednesday, October 28, followed by the ECB on Thursday.
Bank of America is among the few major financial institutions expecting a rate increase by the Fed this week. Market estimates cited in the report suggest a 90% probability that the US central bank will leave rates unchanged. The Fed's official calendar confirms that its policy meeting is scheduled for October 27-28.
Investors broadly expect the next Fed rate increase in December, assigning a probability of around 70% to such a move.
The Fed has raised interest rates once this year, while the ECB has implemented two increases.
Rising crude oil prices weighed on US equities on Friday despite relative stability in technology and semiconductor stocks. Inflation concerns continued to weaken investor confidence.
The Dow Jones Industrial Average declined 652.82 points, or 1.23%, to close at 52,215.16. The S&P 500 fell 39.75 points, or 0.52%, to 7,623.68, while the Nasdaq Composite lost 53.52 points, or 0.21%, to finish at 25,955.34.
US stock futures were trading in negative territory early Monday. Dow Jones futures initially advanced but subsequently turned negative. S&P 500 futures declined by approximately five points, or 0.06%, while Nasdaq futures slipped 59 points, or 0.20%.
Indian companies listed through American Depository Receipts (ADRs) witnessed mixed movements in New York on Friday.
HDFC Bank ADRs declined 1.56% during regular trading but recovered 1.40% in extended trading to close at $22.40.
ICICI Bank ADRs fell 1.60% during the regular session and lost another 1.97% in extended trading, ending at $28.88.
Infosys ADRs plunged 6.58% during regular trading before gaining 0.40% in extended trading to close at $12.40.
Wipro ADRs declined 3.65% during market hours and remained unchanged in extended trading at $2.11.
European equities extended their losses on Friday as political unrest in France and weaker-than-expected corporate earnings dampened sentiment.
Slowing Chinese demand has particularly affected European luxury goods manufacturers. Shares of luxury companies have declined by approximately 24% this year.
Kering, the parent company of Gucci, plunged 16.6% following disappointing sales. In contrast, L'Oréal shares gained 5.6% on stronger sales growth.
Protests in France turned violent again over the weekend before conditions subsequently eased.
Moody's decision to retain France's Aa3 credit rating provided some relief to European markets.
Major Asian stock markets showed mixed trends on Monday morning.
South Korea's Kospi declined approximately 1%. Shares of SK Hynix advanced, while Samsung Electronics traded lower.
Japan's Nikkei initially moved higher but subsequently slipped 0.55%. Australia's benchmark index declined 0.35%.
Hong Kong's Hang Seng gained 0.30%, while China's Shanghai Composite advanced 0.90%.
Escalating tensions in West Asia and rising crude oil prices pushed Indian equities lower for the fourth consecutive trading session on Friday.
The market remained under pressure for most of the session before recovering part of its losses during the closing auction session.
For the week, the Sensex declined 2.14%, while the Nifty 50 lost 2.25%.
Broader markets witnessed sharper selling. Mid-cap and small-cap indices fell by as much as 3% on Friday.
The Nifty Midcap 100 index declined 5.6% during the week, while the Nifty Smallcap 100 lost approximately 7%.
The weekly decline in mid-cap stocks was the steepest in two years.
Metal, defence, capital markets, consumer durables, media and realty stocks were among the worst performers, with several sectoral indices declining more than 5% during the week.
Market breadth remained deeply negative, with approximately four stocks falling for every stock that advanced.
On the BSE, 838 stocks gained while 3,588 declined. On the NSE, 623 stocks advanced and 3,011 ended lower.
Foreign portfolio investors turned marginal net buyers on Friday, purchasing equities worth ₹887.65 crore in the cash market.
Domestic institutional investors recorded net purchases of ₹3,235.36 crore.
However, foreign investors remained net sellers for the week, withdrawing ₹2,697.37 crore. This marked their ninth consecutive week of net selling.
Sensex: 73,123.83, down 125.56 points (0.17%)
Nifty 50: 22,600.00, down 87.65 points (0.39%)
Bank Nifty: 54,287.35, down 638.35 points (1.16%)
Nifty Midcap 100: 55,800.65, down 1,263.30 points (2.21%)
Nifty Smallcap 100: 17,739.45, down 536.40 points (2.94%)
Infosys has lowered its revenue growth forecast for the current financial year for the second time.
The company reduced its revenue growth guidance from 1.5-3% to 1-2%, while retaining its operating margin forecast of 20-22%.
The downward revision triggered a sharp decline in Infosys ADRs in New York on Friday.
The company's second-quarter performance fell short of market expectations. Constant-currency revenue growth was weaker than anticipated, while operating margins contracted.
Reported revenue increased 2.1%, while net profit rose just 0.7%.
Bharat Petroleum Corporation Limited (BPCL) returned to profitability in the second quarter.
Revenue stood at ₹1.49 lakh crore, below market expectations.
The company reported a net profit of ₹4,993 crore, compared with a loss of ₹3,962 crore in the corresponding comparison period.
Kotak Mahindra Bank reported a 29.5% increase in net profit, supported by a 15.7% rise in net interest income.
The bank's non-performing asset ratio declined to 0.24%.
IT services company Coforge reported an 11.6% increase in second-quarter revenue.
Net profit increased 13.4%, while dollar-denominated revenue rose 10.1%.
Torrent Pharmaceuticals reported a 50.8% increase in quarterly revenue.
However, net profit declined 9.6%, despite a 54.1% increase in operating profit.
Apollo Micro Systems reported a 72.2% increase in revenue during the quarter.
Net profit rose 55.6%.
Dr Reddy's Laboratories reported a 1.5% decline in revenue.
Net profit fell sharply by 36%.
IDFC First Bank reported a 21% increase in net interest income.
The bank's net profit rose threefold during the quarter.
AU Small Finance Bank posted a 32% increase in net interest income.
Net profit advanced 53%.
Bank of India reported an 18.5% increase in net interest income.
Net profit grew 25.3%.
Gold and silver suffered sharp declines during the previous week as investors reassessed the outlook for global interest rates. Gold fell approximately 4% over the week, while silver declined 5.4%.
Concerns that interest rates could rise further and remain elevated for an extended period weighed on precious metals. Gold declined $28.40, or 0.71%, on Friday to close at $3,996.90 an ounce, its lowest closing level since July. Early Monday, the metal initially recovered to $4,004 before declining to approximately $3,982.
In Kerala, the price of 22-carat gold fell ₹1,400 per sovereign on Friday to ₹1,04,480. Prices recovered marginally on Saturday, gaining ₹80 to ₹1,04,560 per sovereign.
Silver declined 1.24% on Friday to close at $54.05 an ounce. It recovered slightly to $54.30 on Monday morning.
Other precious metal prices were:
Platinum: $1,558 an ounce
Palladium: $1,039 an ounce
Rhodium: $8,625 an ounce
Natural rubber prices continued to strengthen in Kerala.
The price of RSS-4 grade rubber increased to ₹29,250 per quintal.
The Bangkok rubber market remained closed on Friday due to a holiday.
Most industrial metals gained on Friday, with nickel being the notable exception.
Copper advanced 1.41% to $14,415 a tonne, while aluminium rose 1.13% to $3,043.50 a tonne. Nickel declined 1.51%. Tin, lead and zinc also recorded gains.
Cocoa futures advanced 0.18% to close at $5,592 a tonne. Arabica coffee declined 1.60% to $3.075 a pound. Palm oil gained 0.54% to 4,818 Malaysian ringgit a tonne.
The US dollar index gained on Friday to close at 101.81.
However, it weakened to 101.65 in early Monday trading.
The euro traded at $1.121, while the British pound stood at $1.3371.
The Japanese yen was quoted at 156.82 against the dollar.
The Chinese yuan remained around 6.68 per dollar.
Meanwhile, the yield on the benchmark US 10-year Treasury bond increased to 4.99% on Monday morning.
The Indian rupee continued to weaken against the US dollar.
On Friday, the dollar appreciated by 12 paise to close at ₹94.94.
In the offshore forward market, the dollar was quoted at approximately ₹94.93 early Monday.
The Chinese yuan weakened to ₹14.16, while the euro declined to ₹105.95.
Oil prices remain elevated amid continuing attacks in the Strait of Hormuz, Saudi Arabia and Ukraine. The possibility of renewed joint military strikes by the US and Israel against Iran has added to geopolitical risk.
These developments pushed Brent crude close to $117 a barrel on Friday. Brent futures surged more than 3% to close at $116.72. However, prices eased approximately 1% on Monday morning to $115.62 a barrel. US West Texas Intermediate (WTI) crude traded at $102.18 a barrel.
Elevated crude oil prices remain a major concern for India because of the country's dependence on imported petroleum.
Sustained high prices could increase India's import bill, add to inflationary pressures and weigh further on the rupee.
Cryptocurrency markets resumed their downward movement on Monday morning. Bitcoin slipped below $80,000, while Ether traded below $2,325. Solana declined below $101.
(Friday, October 23)
Sensex: 73,123.83 (-0.17%)
Nifty 50: 22,600.00 (-0.39%)
Bank Nifty: 54,287.35 (-1.16%)
Nifty Midcap 100: 55,800.65 (-2.21%)
Nifty Smallcap 100: 17,739.45 (-2.94%)
Dow Jones: 52,215.16 (-1.23%)
S&P 500: 7,623.68 (-0.52%)
Nasdaq Composite: 25,955.34 (-0.21%)
US dollar: ₹94.94 (+₹0.12)
Gold (international): $3,996.90 an ounce (-$28.40)
Gold (Kerala, Friday): ₹1,04,480 per sovereign (-₹1,400)
Gold (Kerala, Saturday): ₹1,04,560 per sovereign (+₹80)
Brent crude: $116.72 a barrel (+$3.55)
