Indian equity benchmarks, the Sensex and Nifty 50, are anticipated to commence trading on a mixed-to-positive note this Tuesday, January 6. The cautious optimism finds support from gains in several Asian markets, even as investors globally digest the dramatic geopolitical developments following the U.S. military operation in Venezuela.
Market Outlook and Previous Session Recap
The Gift Nifty, an early indicator for the Indian market, was trading at 26,392, marking a gain of 76 points or 0.28% from the previous close of Nifty futures. This points towards a potentially positive opening for the domestic indices.
This comes after a subdued performance on Monday, where both the Sensex and Nifty 50 closed lower, defying upbeat global cues. The Nifty 50 slipped about 0.3% to settle near the 26,250 mark after a volatile session. Early optimism that pushed the index to a record intraday high gradually faded as investors engaged in profit booking, particularly in heavyweight IT stocks.
Ajit Mishra, SVP of Research at Religare Broking, noted, "Markets ended marginally lower... Sentiment remained subdued due to weakness in heavyweight IT stocks, which declined sharply and offset positive developments in select cyclical names. Global cues were mixed, with investor sentiment influenced by geopolitical developments."
Key Global Factors Influencing Trade Today
Asian markets presented a mixed picture on Tuesday morning. Japan's Nikkei 225 advanced 1.12%, and the Topix surged 1.48% to an all-time high. Hong Kong's Hang Seng Index gained 0.7%. However, South Korea's Kospi slipped 0.85%, and China's CSI 300 was flat, reflecting lingering caution.
On Wall Street, major indices closed higher on Monday. The Dow Jones Industrial Average climbed 594.79 points, or 1.23%, to finish at a record high of 48,977.18. The S&P 500 and Nasdaq Composite also rose by 0.64% and 0.69%, respectively. The rally was led by financial and energy stocks, the latter surging after news of the Venezuelan operation.
Geopolitical Ripples and Commodity Movements
The significant geopolitical event driving market sentiment is the U.S. military operation that resulted in the capture of Venezuelan President Nicolas Maduro and his wife. Maduro has pleaded not guilty to U.S. federal drug trafficking charges. This development has injected uncertainty into global risk appetite.
Crude oil prices slipped slightly on Tuesday as the market assessed the potential for increased Venezuelan oil production. Brent crude futures edged down 0.2% to $61.62 a barrel, while U.S. West Texas Intermediate crude fell 0.3% to $58.15 a barrel.
Meanwhile, gold prices steadied around $4,440 an ounce after a jump in the prior session, as investors shifted focus from Venezuela to upcoming U.S. economic data. The U.S. dollar held firm near a two-week high, with the dollar index at 98.36.
As trading begins, Indian market participants will be weighing positive global cues against the backdrop of geopolitical tension and its potential impact on oil prices and broader risk sentiment. The performance of IT stocks and investor reaction to the day's developments will be crucial for the direction of the Sensex and Nifty.
