The Indian stock market opened slightly lower on Friday, October 11, 2024, amid weak cues from global markets, particularly in the United States.
Investors are reacting to various key developments, including rising inflation in the U.S., TCS’s underwhelming Q2 earnings, and trends in Gift Nifty. Here are the eight most important changes affecting the market today.
1. Gift Nifty Trends
Gift Nifty, a leading indicator for the Indian stock market, was trading around the 25,085 level, showing a discount of nearly 35 points from Nifty futures’ previous close. This indicated a weak start for Indian indices, including the Sensex and Nifty 50.
The muted performance in Gift Nifty is largely influenced by global cues, especially concerns over rising inflation in the United States and the subsequent impact on interest rates.
2. US Inflation Data
U.S. consumer prices rose by more than expected in September, with the Consumer Price Index (CPI) increasing by 0.2% on a monthly basis. The annual inflation rate now stands at 2.4%, slightly higher than the 2.3% forecast by economists. This has raised concerns about whether the U.S. Federal Reserve will continue with its expected rate cuts.
For the Indian market, U.S. inflation data is a significant factor, as higher inflation could lead to more aggressive monetary tightening by the Federal Reserve, which may trigger outflows from emerging markets like India.
3. TCS Q2 Earnings Fall Short
Tata Consultancy Services (TCS), one of India’s largest IT companies, reported a 1.1% decline in net profit for Q2 FY25. The company posted a profit of ₹11,909 crore, down from ₹12,040 crore in the previous quarter. Revenue rose by 2.6%, but EBIT margins shrunk by 60 basis points.
This underperformance in TCS has had a ripple effect on other IT stocks, with Wipro, HCL Technologies, and Infosys also seeing downward pressure in early trading. Investors are concerned about the broader IT sector’s ability to sustain high valuations amid rising costs and cautious discretionary spending by clients.
4. Sensex and Nifty Open Lower
Both the Sensex and Nifty 50 opened slightly lower on Friday, reflecting the weak global cues and domestic corporate earnings concerns. The Sensex dropped by 142 points, or 0.17%, to 81,469, while Nifty 50 was down by 36 points, or 0.12%, to 24,960.
The banking sector saw significant selling pressure, with Nifty Bank down by 204 points, or 0.4%, as a result of investor concerns about inflationary pressures and future interest rate movements.
5. Global Market Trends
Asian markets were mostly higher despite weak cues from the U.S. Japan’s Nikkei 225 rose by 0.3%, and South Korea’s Kospi index gained 0.8%. However, the Hang Seng index futures indicated a lower opening for Hong Kong stocks.
The mixed global market trends, particularly the divergence between Asia and the U.S., have added to the volatility in Indian markets, with investors treading cautiously.
6. Sectoral Performance
Among Indian sectors, IT, PSU banks, and metal stocks were trading higher, while auto, financial services, and FMCG stocks were under pressure. Bharti Airtel, Bajaj Finance, and ICICI Bank were some of the top losers in early trade.
Investors are rotating out of high-valuation sectors like FMCG and financial services into relatively safer sectors like IT and metals, which are seen as better insulated from inflationary pressures.
7. US Jobless Claims Surge
In another key development affecting global markets, U.S. jobless claims surged last week, with initial claims for state unemployment benefits rising by 33,000 to 258,000. This was higher than the expected 230,000 claims and added to concerns about the strength of the U.S. labor market.
Higher jobless claims may increase the likelihood of the Federal Reserve holding off on future rate cuts, which could lead to more volatility in the Indian stock market.
8. Crude Oil Prices Decline
Crude oil prices retreated after a 3% rally earlier this week. Brent crude was down 0.34% to $79.13 per barrel, while U.S. West Texas Intermediate (WTI) crude fell 0.29% to $75.63 per barrel. Lower oil prices are a positive development for India, which relies heavily on imported energy.
The dip in oil prices is seen as a relief for Indian markets, as it may help ease inflationary pressures and improve corporate margins for industries dependent on fuel.
Conclusion
In summary, the Indian stock market is navigating a volatile environment, influenced by U.S. inflation data, TCS’s underwhelming earnings, and broader global market trends.
Investors should remain cautious and closely watch key sectors, including IT, banking, and metals, as these will likely drive market movements in the coming days.
Disclaimer
The information provided in this article is for informational purposes only. It does not constitute financial advice. Investors should consult with a financial advisor for personalized investment guidance.
