Global Market Tensions Hit Indian Stocks Hard

The Indian stock market is gearing up for a rough start this Monday, as global cues are painted in weak colors. With fears of a recession continuing to loom over the US economy and disappointing earnings reports from major tech companies, investors are feeling uneasy.

As of 7:00 AM, futures for the Nifty 50 index were showing a significant gap-down opening, with indications that the index might drop over 300 points. Last week, the Nifty lost 0.4% after reaching an impressive milestone of crossing the 25,000 mark for the first time ever.

The mood in the markets is expected to be somber this week, especially with the Reserve Bank of India (RBI) policy meeting coming up on Thursday. Vinod Nair from Geojit Financial Services noted that due to high valuations and lackluster quarterly results, further market consolidation seems likely.

The situation in the US isn’t helping either. Stocks took a hit on Friday after the nonfarm payroll data was disappointing, leading traders to now expect potential interest rate cuts from the Federal Reserve in the coming months. Major indices like NASDAQ, S&P 500, and Dow Jones posted significant losses.

Over in Asia, the scene is just as grim. Japan‘s Nikkei index plummeted by 7%, mirroring the volatility brought on by the Bank of Japan’s unexpected interest rate hike. The Japanese Yen has also strengthened considerably, raising concerns about potential sell-offs by foreign investors.

Other Asian markets weren’t spared, with Taiwan dropping 6.5%, the Kospi down 4.4%, and Straits Times seeing a decline of 3.2%. Hong Kong’s Hang Seng and the Shanghai Composite indices also reflected this trend, with similar drops in values.

Analysts are watching the Nifty index closely. Osho Krishan from Angel One mentioned that while the index remains above its major moving averages, caution is warranted as we see some signs of exhaustion in the market.

On the lower side, crucial support levels are identified at around 24,600 to 24,500. If the Nifty manages to break above the resistance zone, it could set the stage for a new rally.

Moving over to the Bank Nifty, Hrishikesh Yedve highlighted that it is currently caught in a tight range of 51,000-52,300. A decisive breakout from this range might provide better clarity on market direction.

In terms of trade activity, foreign institutional investors (FIIs) faced a rough patch, net selling stocks worth Rs 3,310 crore. In contrast, domestic institutional investors (DIIs) were active buyers, snapping up shares worth nearly Rs 2,966 crore.

As for the stock market, a few stocks are under the ban period including Aditya Birla Capital, Birlasoft, and more. On the primary market front, the Ola Electric IPO saw 38% subscription on its first day, while Picture Post Studios and Afcom Holdings IPOs received significant interest.