The Indian stock market is likely to begin Tuesday's trading session with little change, mirroring a cautious mood across Asia. Key benchmark indices, the Sensex and Nifty 50, are expected to open on a muted note as investors globally await crucial US economic data that could influence the future path of interest rates.
Global Cues Weigh on Market Sentiment
This tentative start follows a broadly negative trend in Asian markets on Tuesday morning. Investors in the region are pulling back from riskier assets ahead of the release of key US indicators, including inflation and jobs data. This has led to a modest decline in major Asian indices. The Japanese Topix fell by 0.8%, while the yen strengthened, adding pressure to regional equities. Futures for the S&P 500 and Nasdaq 100 also edged lower in early Asian trading.
The direct indicator for the Indian market, the Gift Nifty, was trading near the 26,085 level, reflecting a slight dip of 5.5 points or 0.02% from the previous close of Nifty futures. This points towards a flat opening for the domestic benchmarks.
Domestic Market Recap and Key Drivers
On Monday, December 15, Indian equities snapped a two-day winning streak to close lower. The Sensex declined by 54 points (0.06%) to settle at 85,213.36, while the Nifty 50 fell by 20 points (0.08%) to end at 26,027.30. According to Vinod Nair, Head of Research at Geojit Investments Limited, persistent foreign fund outflows and a weak rupee have contained the markets within a narrow range.
Nair added that currency volatility is likely to persist until there is more clarity on the India-US trade deal. However, expectations of an earnings recovery in the second half of the fiscal year 2025-26, supported by monetary and fiscal measures, are helping to stabilize overall market sentiment. He emphasized that future market momentum is expected to be driven by corporate earnings rather than valuations alone.
Other Crucial Market Influencers
Wall Street Performance: US stocks closed lower on Monday, led by a continued sell-off in technology shares. The S&P 500 slipped 0.2%, and the tech-heavy Nasdaq 100 dropped 0.5%, extending its losing streak. The Dow Jones Industrial Average fell 41.49 points (0.09%).
India-US Trade Deal Progress: In a positive development, Commerce Secretary Rajesh Agrawal stated that India and the US are nearing a framework agreement to roll back reciprocal penal tariffs on Indian exports. He confirmed that discussions are progressing swiftly, though a definitive timeline was not provided.
Commodities and Forex: Gold prices held steady near $4,305 an ounce after a five-day rally. Oil prices hovered near multi-year lows as traders considered the impact of potential peace in Ukraine. The US dollar slipped to a near two-month low against a basket of currencies, with the dollar index falling to 98.261.
Investors will now closely monitor the upcoming US economic data and developments in the India-US trade negotiations for further directional cues.
