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Gift Nifty and Global Impact: 6 Key Overnight Changes in Indian Stock Market

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Published Date: 20 Sep 2024Updated Date: 31 Dec 20246 mins readBy MOFSL

Indian Markets Overview

Buoyed by the recent 50 basis points rate cut by the US Federal Reserve, India's leading indices, Nifty 50 and S&P BSE Sensex, touched record highs. However, they ended the day with modest gains. The Nifty 50 rose by 0.15%, closing at 25,790, while the Sensex edged up by 0.29%, settling at 84,544.

The US rate cut spurred expectations of further monetary easing in India, boosting the Nifty Bank Index by 0.54%, which closed at 53,793. Sectors like Auto, Realty, FMCG, and Consumer Durables saw gains, while IT, Metals, and Oil & Gas ended the day in the red.

On the other hand, concerns about a global slowdown following the larger-than-expected rate cut hit the mid and small-cap segments harder. The Nifty Midcap 100 and Small Cap 100 indices fell between 0.67% and 1.27%.

Asian Markets Response

Asian markets typically respond positively to Fed rate cuts, as reduced U.S. interest rates drive higher demand for regional equities and reduce the cost of servicing dollar-denominated debt. On Thursday, major Asian indices followed suit.

Japan's Nikkei led the charge, surging by 2.1%, while the Topix Index also posted a solid 1.9% gain. South Korea's KOSPI rose by 0.57%, and the KOSDAQ followed closely with a near 1% uptick. Futures for Hong Kong’s Hang Seng and mainland China’s CSI 300 indicated a more muted response, with the Hang Seng trading flat and the CSI 300 slightly lower compared to the previous session.

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Positive Signs in Gift Nifty

Gift Nifty showed positive signals, trading near the 25,400 mark, approximately 30 points higher than the previous close of Nifty futures. This premium suggested an optimistic opening for the Indian stock market.

European Markets Roundup

European markets were largely positive in reaction to the US Fed's move. London's FTSE 100 rose by 0.9%, closing at 8,330.62, as analysts forecast the Bank of England would likely hold its interest rate at 5.0%.

In the eurozone, Paris's CAC 40 climbed 1.4% to settle at 7,551.65, while Germany’s DAX gained 0.9%, closing at 18,882.53. European investors, like their global counterparts, seemed encouraged by the Fed's decision, driving the upward momentum across the region's major indices.

US Markets: Modest Declines After Early Gains

Despite hitting intraday highs, U.S. stocks closed with modest declines on Wednesday following the Federal Reserve’s rate cut. The Dow Jones Industrial Average fell by 103.08 points, or 0.25%, to 41,503.10. The S&P 500 slipped by 0.29% to 5,618.26, and the Nasdaq Composite dropped 0.31% to 17,573.30.

Interestingly, the Russell 2000 Index saw an intraday surge of 2.44% before closing with a slight gain of 0.04%. Regional banks also saw a boost, with the KBW Regional Bank Index closing 0.46% higher after a 3.53% rally earlier in the day.

US Treasury Yields and Dollar Reaction

U.S. Treasury yields climbed on Thursday as investors responded to the Fed’s rate cut, signalling optimism in the market. The 10-year Treasury yield saw a noticeable increase.

The U.S. dollar also strengthened, bouncing back from an initial dip following the Fed’s announcement. The dollar gained 0.58% against the yen, reaching 143.12. The euro slipped by 0.04% to $1.1113, while the British pound edged down 0.11%, settling at $1.3199.

Gold Prices Hold Steady Amid Fed Remarks

Gold prices remained flat on Thursday as markets absorbed remarks from Federal Reserve Chair Jerome Powell following the large rate cut. Spot gold held steady at $2,558.00 per ounce, having reached a record high of $2,599.92 the previous day. U.S. gold futures, however, slipped by 0.6% to $2,582.70.

Crude Oil Prices: A Mixed Day

Crude oil prices initially declined after the Fed's rate cut, with Brent crude futures falling by 0.46% to $73.31 per barrel, and WTI crude slipping by 0.59% to $70.49. Concerns about a potential economic slowdown in the U.S. contributed to the dip.

However, escalating tensions in Lebanon later in the day sparked fears of supply disruptions, causing oil prices to rebound. These geopolitical factors continue to drive uncertainty in global energy markets.

Conclusion

While the US Federal Reserve's rate cut has injected a dose of optimism into global markets, its effects have been mixed across different sectors. Indian markets, along with broader Asian and European indices, responded positively, while U.S. equities showed more caution. The days ahead will reveal whether this trend of cautious optimism continues or if concerns over a global slowdown take a stronger hold on investor sentiment.

 

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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