Indian Stock Markets Slump Amid Global Uncertainties and Regional Tensions

The domestic equity market indices in India, Sensex and Nifty 50, are expected to open lower on Thursday, October 3, 2024, following mixed signals from global markets and growing anxieties surrounding intensified Middle Eastern conflicts. Specifically, the ongoing war developments between Iran and Israel have further escalated geopolitical tensions.

Asian markets displayed varied performances as reports of heightened tensions circulated, while the United States stock market saw marginal increases overnight, largely driven by gains in technology stocks. U.S. and Israel have announced retaliatory plans following Iran’s missile strike on Israel on Tuesday.

Amid these global conditions, the perspective of a potential quarter-percentage-point rate reduction at the Federal Reserve’s November meeting has risen, with current odds at 65.7%, up from 42.6% the previous week, as cited by CME Group’s FedWatch Tool. The forecasting indicates speculative movements in response to international developments and economic indicators.

It’s notable that on Tuesday, October 2, the Indian markets showed minimal variance in their closure, which coincided with the national holiday of Gandhi Jayanti. The Sensex fell by 33.49 points, or 0.04%, closing at 84,266.29, while the Nifty 50 experienced a 13.95 point, or 0.05%, decline, closing at 25,796.90.

According to insights from Siddhartha Khemka, Head of Research at Wealth Management, mixed global cues and varying predictions from European and U.S. economic authorities are influencing market directions. “We anticipate the market to stabilize with selective stock manoeuvres as we proceed into the results season with upcoming corporate disclosures,” Khemka noted.

In terms of global market trends on October 3, Japanese markets showed a positive trend with Nikkei 225 and Topix climbing by 2.57% and 2% respectively. However, Hong Kong’s Hang Seng index futures pointed towards a slight decline. Markets in China and South Korea remained closed due to holidays.

The U.S. saw modest gains on Wednesday, attributed to the technology sector’s resilience. The Dow Jones Industrial Average rose by 39.55 points, or 0.09%, while the S&P 500 increased by 0.79 points or 0.01%. The Nasdaq Composite showed an upward movement of 14.76 points or 0.08%.

Individual stocks like Nvidia saw a 1.6% rise, whereas Tesla‘s shares fell by 3.5%. Humana Inc reported an 11.8% decline, and other corporation shares also saw significant drops amid the volatile environment.

Meanwhile, economic data from the U.S. provided mixed signals. The ADP National Employment Report revealed that private payrolls escalated by 143,000 jobs in September, exceeding the anticipated 120,000 jobs, following a revised ascent of 103,000 in August.

The Securities and Exchange Board of India (SEBI) has imposed stricter regulations concerning equity derivatives trading, intending to lower available weekly options contracts to a single one per exchange and tripling the minimum trading amount, heightening the market entry hurdle.

Oil prices surged amid the Middle East’s escalating conflict and potential impacts on oil flow disruption. Brent crude futures noted an increase of 0.87% to $74.54 per barrel, while U.S. West Texas Intermediate futures climbed by 1.03% to $70.82 per barrel.

Currency market updates indicated a rise in the U.S. dollar to a month-high against the yen, recording 146.575 yen and peaking at 146.885 earlier on Thursday. The dollar index saw an advance to a three-week high of 101.70, reflecting a 0.45% increase from prior sessions.