Main Factors Driving the Indian stock market in Today’s global market

Global stock market

The global market had a mixed day on Wednesday, with the US stock market trading in different directions. The Dow Jones Industrial Average managed to finish the day 0.24% higher, while the S&P 500 and Nasdaq ended lower by 0.25% and over 1%, respectively. The mixed performance was due to investors digesting the ADP Nonfarm Employment Change data, which showed signs of a slowing US labor market, making investors nervous about the economic outlook.

In addition to the US market, Asian stocks also saw a negative trend on Thursday morning. The Japanese Nikkei index fell by over 1%, while the Shanghai index lost 0.22%, and Hong Kong’s Hang Seng went off by 0.15%. The South Korean KOSPI lost 0.60%, indicating an overall bearish sentiment among investors.

Meanwhile, the US dollar continued to oscillate around a two-month low due to weak US economic data that cemented the idea that the US Fed may pause it’s tightening measures in the near term. While some buying interest was witnessed in the US currency, the Dollar Index climbed 0.11% to 101.680 levels.

On the USD to INR exchange rate, the Indian rupee was expected to trade with a positive bias on a weak greenback and positive domestic markets. However, the surge in global crude oil prices may cap the upside. Investors may remain cautious ahead of RBI’s monetary policy decision tomorrow. There are expectations of a 25-bps repo rate hike before the central banks take a pause. Traders may also remain cautious ahead of US ADP employment and ISM services PMI data. Market participants may remain alert ahead of the US non-farm payrolls report later this week. USDINR spot price is expected to trade in a range of ₹81.50 to ₹82.50 in the near term.

The SGX Nifty today opened downside at 17,591 levels and went on to dip further and hit an intraday high of 17,654 levels. However, profit booking was soon triggered and SGX Nifty started falling and went on to hit an intraday low of 17,565 within a few minutes of the Asian stock market opening. Nonetheless, one should maintain a buy-on-dips strategy as the SGX Nifty is still above the breakout range of 17,500. The index is witnessing a spurt in volume as well. Therefore, Dalal Street may repeat the same offering buy-on-dips strategy for intraday traders.

Finally, US bond yields for 10 years ascended 0.61% to 3.307 levels while US bond yields for 30 years shot up 0.39% to 3.571 levels. The increase in yields indicates that the bond market expects higher inflation rates, which may lead to a rise in interest rates by the Fed. The rise in interest rates may impact the Indian market as well, as investors may switch from emerging markets to safer investment options in developed markets.

Overall, the Indian stock market is likely to open sideways, based on the trends witnessed in the global market. Investors are advised to watch for any developments in the US market, especially the non-farm payrolls report, which may impact the Indian market. Additionally, the domestic market may react to the RBI’s monetary policy decision, which is expected to announce a 25-bps repo rate hike. As such, traders may remain cautious and maintain a buy-on-dips strategy in the Indian market.

Disclaimer: Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Brokerage will not exceed the SEBI prescribed limit.