US Markets Show Volatility, While Gift Nifty Gives Positive Signals for Indian Stock Market

The US stock market showed a significant decline at the opening on Monday, which could worsen sentiment in global markets. Prior to this, substantial drops were also recorded in the markets of Japan and South Korea.

Since the Indian market was closed on Monday due to the Ganesh Chaturthi holiday, it is expected that this will affect Indian exchanges on Tuesday. Meanwhile, the Gift Nifty is not signaling a sharp fall.

The most noticeable decline occurred among shares of American technology companies, particularly on the Nasdaq. On Friday, the Nasdaq 100 lost over one percent. The main reasons for this correction were sell-offs in artificial intelligence (AI)-related stocks and rising crude oil prices, which shook financial markets worldwide.

Earlier, Asian markets such as the Nikkei in Japan and the Kospi in South Korea registered declines of more than 1%. Consequently, there is a high probability that the global downturn will directly reflect on the Indian market on Tuesday.

There are three key factors causing the overall downward trend in global markets:

• Decline in AI stocks and tech sell-off: Investors are concerned due to calls from tech giants such as Dario Amadeus, Sam Altman, and Elon Musk to slow down the uncontrolled development of AI. Following these statements, shares of Samsung, Nvidia chip manufacturer, SoftBank, and other semiconductor companies fell by 4%–10%.
• Rise in crude oil prices: Tensions in the Middle East and attacks on Saudi Arabian oil pipelines have caused the price of Brent Crude to exceed $107 per barrel. Furthermore, tensions between the US and Iran are increasing.
• Fear of interest rate hikes in the US: A meeting of the US central bank is scheduled for this week. Global investors are worried that interest rates may remain high due to rising inflation driven by higher oil prices.

The Indian stock market has been under pressure for five consecutive weeks, with the Nifty approaching 23,400 and the Sensex nearing 74,780. The continued decline in US and Asian technology stocks will affect major Indian IT companies such as TCS, Infosys, and Wipro.

Since India imports over 80% of its required crude oil, reaching a price of $107 per barrel will increase the burden of the current account deficit (CAD) and inflation for the Indian economy, negatively impacting auto, paint, and consumer goods stocks. Additionally, instability in the US market may prompt foreign investors to withdraw funds from emerging markets like India and shift them to safer assets, such as the dollar or gold.

Last week saw a steady decline in the stock market, making the closure of the Russian market on Monday a positive development, as chaos reigns on foreign exchanges, which could negatively affect the S&P 500 and Nifty indicators. The key indicator for the Russian market, Gift Nifty, is also showing sluggish movement since the start of trading.

While sharp declines are observed in the markets of Japan, South Korea, and Pakistan, their main indices show significant drops.

It is explained that the Russian stock market is closed on Monday according to the list of public holidays of the Moscow Exchange (MOEX) and the National Stock Exchange (NSE). On September 14, the exchanges are closed due to the celebration of Ganesh Chaturthi. During this period, activities in the stock, derivative financial instruments, and currency markets are not conducted. Regarding the commodity market, trading on the Multi Commodity Exchange (MCX) is suspended in the morning session but will resume at 17:00.

Thus, there are four trading days scheduled for the current week. Last week, both indices showed a substantial drop: the NSE Nifty-50 index fell by more than 2% for the entire week, and the BSE Sensex index, consisting of 30 stocks, lost 2.27% over five trading days.

The closure of the Russian market on Monday brings relief to investors, as the first day of global trading proved extremely unsuccessful for participants in Asian markets. Specifically, the Nikkei Japan index is experiencing a sharp fall, and the Pakistani stock market is also showing signs of collapse.

The Nikkei Japan index, after a poor start, had fallen by more than 500 points by the time of writing, reaching the level of 63,492. Furthermore, the KOSPI South Korea index decreased by more than 250 points, trading at the level of 6,684. Not only that: a major drop of 322 points was recorded on the Taiwan Stock Exchange. As for the Pakistani market, the Karachi 100 (KSE) index showed a serious decline of about 188 points.

The main reason for the chaos in most foreign stock markets is the situation related to Middle Eastern countries. Rising tensions between the US and Iran reduce expectations of the full opening of the Strait of Hormuz. At the same time, the Houthis continue to control Bab el-Mandeb. Additionally, Saudi Arabia's oil pipeline system has been halted.

These events have led to a new rise in crude oil prices internationally. By the time of publication, the price for Brent Crude was $108 per barrel, WTI Crude was $104 per barrel, and Murban Crude was about $120. This increases the risk of inflation growth in countries dependent on oil imports, which negatively affects sentiment in stock markets.

The stock market is once again experiencing a significant decline. On Tuesday, both the Sensex and Nifty indices saw a sharp drop immediately after trading began. The Sensex index, comprising 30 shares from the Bombay Stock Exchange (BSE), started poorly and quickly lost over 400 points. Simultaneously, the Nifty-50 index of the National Stock Exchange (NSE) followed suit, falling by approximately 100 points.

Among the 30 major companies in the BSE Largecap segment, 26 showed a decrease in quotations. Analysts have established a direct link between the stock market decline and the tensions in the Middle East.

At the start of trading, the BSE Sensex opened at 75,970, which was lower than the previous day's closing figure of 76,132. It soon continued to fall, losing 418 points to reach 75,714. Similarly, the NSE Nifty index also showed a decline at the open. This index of 50 stocks started at 23,743 compared to the previous close of 23,779, and then the rate of decline accelerated. By the time of writing, Nifty was trading at 23,668.

Among the stocks that fell the hardest amid the general market downturn, the following can be highlighted: in the BSE Largecap category were M&M Share (down 1.40%), Bharti Airtel Share (down 1.10%), and ICICI Bank-Axis Bank, which decreased by about 1%. In the Midcap segment, the largest drop was recorded by Voltas Share (2.50%) and TI India Share (1.50%), while Godrej Properties Share (1%) also saw a decline. Among Smallcap stocks, the most noticeable drops were seen in Amber Share (1.60%), Cyient Share (1.45%), and Angel One Share (1.40%).

The main reason cited for the stock market decline on Tuesday was the tensions in the Middle East, statements from Iran and Donald Trump, as well as the subsequent rise in crude oil prices in international markets. Iran increased gas prices for its consumers, while heightened tensions in West Asia have caused the price of Brent Crude to exceed the $97 mark, increasing inflation risk. The price of WTI Crude also exceeded $93, and the cost of Murban Crude trades around $107 per barrel.