Market set to bounce back as foreign indications turn positive

The market made an attempt to recover yesterday but ultimately failed. However, there were positive movements in banks and financial stocks, and the mid-cap index showed resilience, which could signal a potential upside in today’s trading. Foreign market trends are also favourable, with Asian markets trending upwards this morning. Notably, crude oil prices remain above $73 per barrel, which could influence market sentiment.

In the derivatives market, the Nifty closed at 23,537 on Monday night, initially rising to 23,570 this morning before dipping lower. This suggests that the Indian market could open on a positive note today, although volatility may persist.

Global markets

In the US, markets showed mixed performance at the start of the week. The Dow Jones ended lower, while the Nasdaq posted gains, driven by a rally in Tesla shares. The S&P also saw some improvement. Investors are now focused on the upcoming earnings reports, with Amazon releasing results today and Nvidia due tomorrow. If these results fall short of expectations, the market could face a downturn.

Tesla shares surged by 6% following reports that the Trump administration might ease regulations on driverless cars, potentially benefiting the company. On Monday, the Dow Jones closed down by 55.39 points (0.13%), at 43,389.60. The S&P gained 23 points (0.39%), ending at 5,893.62, while the Nasdaq rose 111.68 points (0.60%) to close at 18,791.81.

Today, US futures are showing slight losses, with the Dow down by 0.11%, the S&P down 0.09%, and the Nasdaq off by 0.12%. The yield on US 10-year Treasuries stands at 4.41%, indicating that the market still expects interest rates to remain high for the foreseeable future. European markets were mixed yesterday, while Asian markets are showing strength today, with Japan’s Nikkei rising by 0.70%, the Australian index up by 0.5%, and South Korea seeing modest gains.

Indian market

The Indian market, which had entered a correction phase, showed some recovery from yesterday's sharp declines. However, the Nifty remains below its 200-day moving average for the seventh consecutive day. A significant portion of mid-cap and small-cap stocks are down more than 20%, with some notable stocks, such as Cochin Shipyard and Chennai Petroleum, down over 55% from their peak.

Yesterday, the broader market showed a clear dominance of declining stocks, with a ratio of 1,569 advances to 2,532 declines on the BSE, and 1,103 advances to 1,752 declines on the NSE. Despite a brief rally, the market remained volatile. The Nifty rose to a high of 23,606.8 but then fell to a low of 23,350. The Sensex reached a peak of 77,886.97 before dropping to 76,965.

By the close, the Nifty was down by 78.90 points (0.34%), settling at 23,453.80, while the Sensex dropped 241.30 points (0.31%) to 77,339.01. The Bank Nifty, however, gained 0.37% (184.25 points), finishing at 50,363.80. The mid-cap index remained almost unchanged at 54,044.80, and the small-cap index fell by 0.53%, closing at 17,507.25.

Information technology stocks dragged the indices lower, with TCS falling by 3.11% and Infosys down by 2.65%. The IT sector, in general, fell by 2.32%. Concerns over the US not cutting interest rates in December have weighed on these stocks. The oil and gas, media, healthcare, and pharma sectors also saw declines, while metals, realty, FMCG, and auto sectors posted gains.

In the energy sector, urban gas supply companies faced a setback as the government reduced the natural gas supply by 20%. This is expected to reduce profits for companies like Indraprastha Gas, Mahanagar Gas, and Gujarat Gas, with stock prices reflecting the anticipated decline.

Aluminum companies saw a boost after China cancelled tax exemptions on aluminum exports, which pushed global aluminum prices higher. Meanwhile, shares of Honasa Consumer (Mamma Earth) plunged 20% after it reported weak earnings, leading some analysts to downgrade the stock due to concerns about its growth prospects over the next two years.

On a positive note, shares of Federal Bank rose by 1.79% to Rs 200.50, and South Indian Bank gained 1.83% to Rs 22.85. Muthoot Finance, on the back of strong Q2 results, surged 6.45% to Rs 1,890.45, with the company raising its business growth forecast for the year. Its total assets have now crossed Rs 1 lakh crore.

On the foreign investment front, Monday saw a net outflow of Rs 1,903.40 crore from foreign investors in the cash market, while domestic funds and institutions were net buyers, purchasing shares worth Rs 2,330.56 crore.

The Nifty index continues to struggle below its 200-day exponential moving average. If the downward trend persists, it could test support levels around 23,200. On the upside, resistance levels are seen at 23,570 and 23,630, with support expected at 23,370 and 23,310.

Gold update

In commodities, gold has been recovering from its earlier losses, supported by geopolitical tensions and a weaker dollar. Gold prices surged by $48.60 to settle at $2,611.90 an ounce on Monday, and they have continued to rise this morning, reaching $2,616. Gold prices in Kerala also saw a significant increase, rising by Rs 480 to Rs 55,960. Silver prices climbed to $31.12 an ounce.

In the currency market, the dollar index fell slightly by 0.40% to 106.28 on Monday, though it has strengthened slightly this morning to 106.21. The Indian rupee rose marginally against the dollar, closing at Rs 84.39, down by just one paisa.

Crude oil prices also rose, driven by the intensifying conflict in Ukraine. Brent crude climbed by 3% to $73.15, and it has stayed above that level this morning, touching $73.37. WTI crude is priced at $69.01, while UAE’s Murban crude stands at $72.50 per barrel.

Cryptocurrencies showed some recovery, with Bitcoin rising to $91,050 and Ether climbing to $3,160.

In industrial metals, copper saw a rise of 0.82% to $8,954.64 per tonne, while aluminum dropped by 1.82% to $2,607.80 per tonne. Zinc and nickel also posted declines, but lead and tin showed gains.

Market indicators:

- Sensex 30: 77,339.01 -0.31%
- Nifty50: 23,453.80 -0.34%
- Bank Nifty: 50,363.80 +0.37%
- Mid Cap 100: 54,044.80 +0.00%
- Small Cap 100: 17,507.25 -0.53%
- Dow Jones: 43,389.60 -0.13%
- S&P 500: 5,893.62 +0.39%
- Nasdaq: 18,791.80 +0.60%
- Dollar($): ₹84.39 -₹0.01
- Dollar Index: 106.28 -0.40%
- Gold (oz): $2,611.90 +$48.60
- Gold (Pavan): ₹55,960 +₹480
- Crude (Brent): $73.15 +$2.11