Global market slump: Will Indian markets reflect US recession fears?

A downturn in global markets is expected to impact the Indian markets at the start of trading today. In the US, recession fears have emerged as enthusiasm for rate cuts wanes. Predictions of a bubble burst have been around for months, and recent data from the US job and factory sectors have added weight to these concerns.

Following declines in European and US markets, Asian markets have also dropped this morning. The dollar has strengthened, and crude oil prices have slightly decreased.

Despite the momentum from GST revenue growth, fiscal deficit reduction, and Nifty crossing 25,000, the impact of Western market trends remains uncertain.

In the derivatives market, the Gift Nifty closed at 24,897 on Thursday night andfell to 24,840 this morning. This indicates a sharp drop in the Indian market at the opening today.

Global markets

European markets saw sharp declines on Thursday, with German and French indices falling by 2.5%.

The Bank of England cut interest rates for the first time in four years, from 5.25% to 5%. Meanwhile, US employment data pointed to recession risks. Rolls-Royce's resumption of dividends and profit expectations boosted its stock by 11%, reaching an all-time high.

The US market, which rallied the previous day, faced significant declines on Thursday. After an initial gain, the market fell.

The US labour market weakened, with a significant increase in unemployment benefit applications and a drop in factory output, heightening recession fears. Predictions of a bubble burst resurfaced. The market's sentiment shifted dramatically in one day, from celebrating anticipated rate cuts in September to reassessing the timing of these cuts.

The Dow Jones fell by 494.82 points (1.21%) to 40,347.97. The S&P 500 dropped by 75.62 points (1.37%) to 5,446.68, and the Nasdaq lost 405.26 points (2.30%) to close at 17,194.40.

US futures are also down, with the Dow falling by 0.35%, the S&P by 0.41%, and the Nasdaq by 0.61%.

Amazon's second-quarter revenue missed expectations, and third-quarter forecasts were lowered, causing its stock to drop by 7%. Intel announced a 15% workforce reduction due to reduced revenue forecasts, resulting in a 20% stock drop. Apple's better-than-expected revenue and profit led to only a marginal stock increase.

US job growth and unemployment data for July are due today, with predictions of lower job numbers than in June. Unemployment is expected to remain at 4.1%.

Asian markets are experiencing significant declines, with Japan's Nikkei down by over 5%. The yen's strength is hurting exports, contributing to market weakness. South Korea's index fell by 3%, and Australia's market by 2%.

Indian markets high

The Indian market reached new highs yesterday, with Nifty opening and closing above 25,000 for the first time, gaining 1,000 points in 24 trading days. Since reaching 20,000 last September, the index has surged by 5,000 points (25%) in less than 11 months, averaging an annual gain of 12.3% since its inception 28 years ago. The Sensex also crossed the 82,000 mark.

The Sensex closed by 126.01 points (0.15%) at 81,867.55, while the Nifty rose by 59.75 points (0.24%) to 25,010.90. The Bank Nifty increased slightly by 0.02% (10.60 points) to 51,564.00.

The mid-cap index fell by 0.85% to 58,490.40, and the small-cap index dropped by 0.98% to 18,949.95.

Foreign investors bought shares worth ₹2,089.28 crore in the cash market, while domestic funds and institutions sold shares worth ₹337.03 crore.

Analysts predict that the bloodbath in Western and Asian markets may repeat in India. Profit-taking pressure is expected, but the 25,000 target for Nifty remains within reach. Support levels for Nifty are at 24,930 and 24,850, with resistance at 25,100 and 25,170.

The GST department withdrew a notice accusing Infosys Technologies of tax evasion worth ₹32,000 crore, citing a legal exemption.

Vehicle sales figures were disappointing, leading to a drop in auto stocks yesterday.

Gold and Dollar Update

Gold, which surged by 1.5% on Wednesday, rose after an initial dip, closing at $2,447.10 per ounce. It opened this morning at $2,440. Profit-taking is expected, but prices are predicted to gradually increase, with holiday prices in December projected at $2,490.

In Kerala, gold prices rose by ₹400 per sovereign to ₹51,600.

Silver prices fell to $28.35 per ounce.

The dollar index closed at 104.42 on Thursday and is currently at 104.40.

The rupee saw slight gains yesterday, with the dollar closing at ₹83.72.

Despite ongoing Middle East conflict fears, crude oil prices have dropped. Brent closed at $79.83, WTI at $76.67, and UAE's Murban crude at $78.80.

Industrial metals saw mixed movements following the US Fed decision. Copper fell by 1.14% to $8,998 per tonne, while aluminium rose by 0.26% to $2,296.25 per tonne.

Cryptocurrencies remained relatively stable, with Bitcoin near $64,800 and Ether below $3,200.

Market Indicators (August 1, 2024, Thursday)

• Sensex 30: 81,867.55 (+0.15%)
• Nifty 50: 25,010.90 (+0.24%)
• Bank Nifty: 51,564.00 (+0.02%)
• Mid Cap 100: 58,490.40 (-0.85%)
• Small Cap 100: 18,949.95 (-0.98%)
• Dow Jones 30: 40,348.00 (-1.21%)
• S&P 500: 5,446.68 (-1.37%)
• Nasdaq: 17,194.20 (-2.30%)
• Dollar ($): ₹83.72 (₹0.00)
• Dollar Index: 104.42 (+0.33)
• Gold (Ounce): $2,447.10 (-$01.20)
• Gold (Sovereign): ₹51,600 (+₹400)
• Crude (Brent) Oil: $79.52 (-$01.20)