The Indian stock market benchmark indices, Sensex and Nifty 50, are expected to open lower on Thursday, following weakness in global markets, amid rising US Treasury yields and elevated crude oil prices.
The trends on Gift Nifty also signal a negative start for the Indian benchmark indices, Nifty 50 and Sensex, today. The Gift Nifty was trading around 22,556 level, a discount of nearly 77 points from the Nifty futures' previous close.
In the previous session, the domestic equity indices fell over half a percent each after the Reserve Bank of India (RBI) delivered hawkish monetary policy, with a hike in repo rate by 25 bps.
The Sensex declined 429.11 points, or 0.59%, to close at 72,638.70, while the Nifty 50 settled 173.05 points, or 0.76%, lower at 22,603.05.
“The market focus will turn to the September-quarter earnings season for further direction. A resilient macroeconomic backdrop supports headline expectations, but investors will watch management commentary closely for evidence on whether the companies can absorb rising input costs, retain pricing power and sustain demand through the second half of the fiscal year,” said Vinod Nair, Head of Research, Geojit Investments Limited.
Here are five key factors that may drive the Indian stock market today:
Asian Markets
Asian stock markets traded lower on Thursday, tracking overnight losses on Wall Street on higher US Treasury yields. Japan's Nikkei 225 declined 1.02% while the Topix slipped 1.47%. South Korea's Kospi dropped 0.75% and the Kosdaq rose 0.28%. Hong Kong's Hang Seng index futures indicated a lower opening.
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Wall Street
US stock market ended lower on Wednesday as the long-dated US Treasury yields resumed upside.
The Dow Jones Industrial Average declined 341.11 points, or 0.66%, to 51,180.17, while the S&P 500 fell 17.18 points, or 0.22%, to 7,801.75. The Nasdaq Composite closed 61.19 points, or 0.22%, lower at 27,538.69.
US Fed Meeting Minutes
The minutes of the Federal Open Market Committee September 15-16 meeting showed that all 19 Federal Reserve officials backed the decision to raise interest rates. “Most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end,” the minutes said.
Dollar
The dollar held near its strongest level in eighteen years after hawkish US Fed meeting minutes. The dollar index, which measures its strength against a basket of six currencies, was steady at 102.23 after rising 0.3% on Wednesday.
The US dollar fell 0.2% to 157.815 yen, while against the Chinese yuan the US dollar was flat at 6.7015 yuan in offshore trade. The euro was flat at $1.1201, while the British pound was also flat at $1.3215.
Crude Oil Prices
Crude oil prices gained after reports that the US plans strike options against Iran before the midterm elections. Brent crude futures rallied 1.16% to $101.36 a barrel, while US West Texas Intermediate crude was at $89.18 a barrel, up 1.02%.
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