The sharp sell-off in technology stocks on Wall Street on Thursday spilled over into Asian markets on Friday morning. However, Indian equities are expected to attempt a recovery despite the weakness in global markets.
The technology rout prompted investors to shift some of their money into government bonds, pushing up bond prices and lowering yields. Concerns over a possible slowdown in artificial intelligence (AI) investments also weighed on precious metals. Gold has lost around 4% and silver nearly 8% over Thursday and Friday morning.
Meanwhile, geopolitical tensions in West Asia continued to escalate, with fears of renewed air strikes on Iran and further attacks in Saudi Arabia. Russia and Ukraine have also intensified attacks against each other. Brent crude oil prices approached $114 a barrel.
Gift Nifty, which closed at 22,880 on Thursday night, slipped to 22,810 on Friday morning before recovering slightly. Despite the weakness, market indicators suggested the possibility of a positive opening for Indian equities.
Disappointing results from Meta Platforms and Tesla heightened concerns over the technology sector, triggering a sharp sell-off on Wall Street on Thursday.
Five major technology companies collectively lost around $800 billion in market capitalisation during the session. The Philadelphia Semiconductor Index plunged 7%.
Meta shares fell 7%, taking their two-day decline to 12%. The company alone lost nearly $100 billion in market value on Thursday.
Other major technology stocks also suffered losses.
Nvidia: Down 4.4%
Amazon: Down 4.6%
Microsoft: Down 2.2%
Alphabet: Down 3.1%
Meta Platforms: Down 7%
Apple and Netflix were among the few major technology stocks to register gains. Semiconductor companies, including AMD, Micron and Intel, declined by as much as 8%. American depositary receipts (ADRs) of South Korean chipmaker SK Hynix also fell 8%.
Investors are increasingly worried about declining profitability, soaring capital expenditure on AI infrastructure and uncertainty over whether companies can generate enough additional revenue to repay the debt incurred to finance these investments.
Meta's latest results raised concerns about its free cash flow position. Analysts had previously warned about the risks associated with massive AI spending, but markets had largely dismissed those concerns as excessive.
Nvidia chief executive officer Jensen Huang's remarks about the growing difficulty AI companies face in securing sufficient capital added to the negative sentiment.
As investors moved away from equities towards government bonds, bond prices rose and yields declined to below 5%.
The rise in crude oil prices towards $113 a barrel also weighed on market sentiment.
Dow Jones: 52,867.98, up 11.89 points or 0.02%
S&P 500: 7,663.43, down 93.74 points or 1.21%
Nasdaq Composite: 26,008.86, down 693.99 points or 2.60%
US stock futures showed a mixed trend on Friday morning.
Dow Jones futures declined 92 points, or 0.17%, while S&P 500 futures slipped six points, or 0.08%. Nasdaq futures, however, gained 56 points, or 0.19%.
Indian American depositary receipts (ADRs) witnessed mixed trading in New York on Thursday.
HDFC Bank fell 1.01% during regular trading but recovered 1.02% in extended trading to close at $22.67.
ICICI Bank gained 1.35% during regular trading before declining 0.17% in extended trading to $29.89.
Infosys rose 3.69% during regular trading but slipped 1.44% in extended trading to close at $13.03.
Wipro advanced 1.86% during the regular session and gained another 0.22% in extended trading to $2.1949.
European stock markets declined by more than 1% on Thursday, with banking stocks leading the losses.
Higher crude oil prices and weakness in French government bonds added to the pressure on European equities.
Major Asian stock markets remained under pressure on Friday morning as the technology sell-off in the US affected investor sentiment.
South Korea's Kospi index, which initially plunged 3%, trimmed its losses to around 1.5%. Semiconductor majors SK Hynix and Samsung also recovered some of their early losses.
Japan's Nikkei declined 1.95%, while Australia's benchmark index slipped 0.40%.
Hong Kong's Hang Seng registered a marginal gain. China's Shanghai Composite fell 1.5%, while Taiwan's benchmark index dropped 1.80%.
Indian equities extended their losing streak to a third consecutive session on Thursday, weighed down by rising crude oil prices and intensified Houthi attacks in Saudi Arabia.
The market remained under pressure from the opening bell. Although benchmark indices attempted several recoveries during the session, they failed to sustain the gains.
The broader market suffered heavier losses, with mid-cap and small-cap stocks declining sharply.
Except for tourism, pharmaceuticals and healthcare, all major sectors ended in negative territory. Information technology stocks, which had rallied in the previous session, declined more than 1%.
Market breadth remained weak, with roughly two stocks declining for every stock that advanced.
On the BSE, 1,388 stocks advanced while 2,965 declined. On the NSE, 1,023 stocks gained and 2,494 ended lower.
Foreign institutional investors continued to sell Indian equities. They recorded net sales of ₹3,458.70 crore in the cash market on Thursday.
Domestic institutional investors, including mutual funds, provided some support with net purchases of ₹2,891.32 crore.
Sensex: 73,249.39, down 460.30 points or 0.62%
Nifty 50: 22,687.65, down 123.70 points or 0.54%
Bank Nifty: 54,925.70, down 51.20 points or 0.09%
Nifty Midcap 100: 57,063.95, down 501.90 points or 0.87%
Nifty Smallcap 100: 18,275.90, down 211.40 points or 1.14%
Shares of digital certification and cybersecurity company eMudhra plunged 20% on Thursday following reports of a cyber intrusion.
The stock has lost around 36% so far this week. The company announced that it would discontinue its security certification business, which accounts for only about 1% of its revenue.
Quick-commerce and food delivery company Swiggy reported a 54.4% increase in revenue for the second quarter.
Its net loss narrowed to ₹922 crore from ₹1,092 crore in the corresponding period.
Colgate-Palmolive reported a 12.2% increase in second-quarter revenue, while net profit rose 4.1%. However, both profitability and profit margins fell short of market expectations.
Technology services company Cyient reported a 77% increase in second-quarter revenue. Net profit rose 22%, while operating margins also improved.
Gold and silver prices witnessed an unexpected decline on Thursday, with the selling pressure continuing into Friday morning.
Gold lost nearly 3% on Thursday despite a weaker US dollar and expectations that the next interest rate increase would come only in December.
Market participants have struggled to identify a clear explanation for the sharp fall. Ordinarily, concerns over escalating attacks in Iran and Saudi Arabia would have supported safe-haven demand for gold. Similarly, rising bond prices and declining yields would not typically be expected to trigger such a steep decline in the precious metal.
One possible explanation is concern that the collapse in technology stocks could lead to a prolonged slowdown in AI investment. Both gold and silver are used in components associated with AI processors.
Gold declined $117, or 2.88%, on Thursday to close at $4,025.30 an ounce, its lowest closing level since July. On Friday morning, prices fell further to $3,986 before recovering to around $4,010.
In Kerala, the price of 22-carat gold declined ₹1,240 per sovereign of eight grams on Thursday to ₹1,05,880.
Silver fell 6% on Thursday to close at $54.72 an ounce. It declined further to $54.37 on Friday morning.
Platinum: $1,553 an ounce
Palladium: $1,031 an ounce
Rhodium: $8,625 an ounce
International rubber prices continued to decline, while domestic prices in Kerala moved higher because of rain-related disruptions to production.
In Bangkok, RSS1 rubber was quoted at $288.20 per quintal, while RSS3 stood at $284.80 per quintal.
In Kerala, RSS4 rubber prices rose to ₹29,050 per quintal.
The divergence reflects tight domestic supplies amid adverse weather conditions, even as international prices remain under pressure.
Industrial metal prices fell on Thursday, with nickel emerging as the only major exception. The decline was largely attributed to concerns surrounding the sharp correction in technology stocks and its possible impact on demand.
Copper fell 1.77% to $14,213.85 a tonne, while aluminium declined 0.56% to $3,007.55 a tonne. Nickel gained 0.65%, while tin, lead and zinc recorded losses.
Agricultural commodities also remained under pressure in global markets. Cocoa prices declined 4.47% to close at $5,582 a tonne. Arabica coffee fell 1.17% to $3.125 a pound. Palm oil declined 0.52% to 4,792 Malaysian ringgit a tonne.
The US dollar index continued its downward trend, closing at 101.61 on Thursday. It slipped further to 101.52 on Friday morning. The euro traded at $1.1219, while the British pound was quoted at $1.34.
The Japanese yen strengthened to 156.77 against the dollar, supported by coordinated moves involving Japan and the US Treasury. The Chinese yuan remained around 6.68 against the dollar.
The yield on the benchmark 10-year US Treasury bond declined to 4.968% on Friday morning as investors increased their exposure to government debt.
The Indian rupee declined on Thursday, ending eight consecutive sessions of gains. The dollar strengthened by 36 paise to close at ₹94.82.
In offshore forward trading on Friday morning, the dollar fluctuated between ₹94.71 and ₹94.80 before settling around ₹94.74.
The Chinese yuan strengthened to ₹14.20, while the euro was quoted at ₹106.40.
Crude oil prices continued to rise amid escalating geopolitical tensions in West Asia and the ongoing Russia-Ukraine conflict.
Attacks in the Strait of Hormuz region, Saudi Arabia and Ukraine have heightened concerns about potential disruptions to oil supplies. There are also fears that the US and Israel could resume joint military strikes against Iran.
These developments have pushed crude oil futures higher, although increased availability has exerted some downward pressure on spot prices.
Brent crude futures surged 4% on Thursday to close at $113.17 a barrel. On Friday morning, Brent climbed further to $113.76, moving closer to the $114 mark. West Texas Intermediate (WTI) crude traded at $99.85 a barrel.
With geopolitical tensions showing little sign of easing, oil futures could face further upward pressure.
Major cryptocurrencies resumed their downward trend on Friday morning as risk aversion spread across financial markets.
Bitcoin slipped below $81,200, while Ether fell below $2,390. Solana also declined, trading below $104.
(October 22, Thursday)
Index and closing level
Sensex: 73,249.39 (-0.62%)
Nifty 50: 22,687.65 (-0.54%)
Bank Nifty: 54,925.70 (-0.09%)
Nifty Midcap 100: 57,063.95 (-0.87%)
Nifty Smallcap 100: 18,275.90 (-1.14%)
Index and closing level
Dow Jones: 52,867.98 (+0.02%)
S&P 500: 7,663.43 (-1.21%)
Nasdaq Composite: 26,008.86 (-2.60%)
Asset and closing price
US dollar: ₹94.82 (+₹0.36)
Gold (international): $4,025.30/oz (-$117)
Gold (Kerala, 22-carat): ₹1,05,880/sovereign (-₹1,240)
Brent crude: $113.17/barrel (+$4.35)
