The Indian stock market is currently navigating a landscape shaped by a confluence of global and domestic factors. Several key overnight developments are poised to influence trading activity. These include movements in the Gift Nifty, progress in Russia-Ukraine peace talks, fluctuations in gold rates, and cues from international markets.
Gift Nifty Signals Positive Start
The Gift Nifty, an indicator of how the Indian market may open, is trading around 26,420, a premium of approximately 29 points compared to the previous Nifty futures close. This suggests a mildly positive start for Indian stock market indices. The Gift Nifty, which replaced the SGX Nifty, is a derivative contract linked to India's Nifty indices and traded on the NSE International Exchange (NSE IX) in GIFT City. It serves as a tool for foreign investors to participate in the Indian equity market and is often used by institutional investors to hedge their India exposure. Indian retail investors cannot directly trade on GIFT Nifty.
Russia-Ukraine Peace Plan Impact
The potential for a US-backed peace deal between Russia and Ukraine is being closely watched by global stock markets. A resolution to this conflict, which began in February 2022, could boost market sentiment and trigger an upside for riskier asset classes. An end to the war could normalize global supply chains, particularly in energy, agriculture, and metals. Sectors like oil marketing companies, paints, tires, and aviation could benefit from lower crude oil prices, while defense stocks and upstream oil exploration companies might experience tempered sentiment.
Gold Prices Steady
Gold prices are holding steady after reaching their highest level in over a week. Spot gold was trading steadily at $4,162.98 per ounce, while US gold futures slumped slightly. Gold prices often move inversely to interest rates; expectations of a US Federal Reserve rate cut tend to support gold prices. In India, gold is considered a safe-haven asset, and its prices tend to increase during times of economic uncertainty. High gold prices can increase the value of collateral for loans, enabling borrowers to secure larger amounts.
Global Market Influences
Asian markets traded mostly lower, while US stock market futures traded flat during a holiday-shortened week. On Wednesday, the US stock market closed higher, driven by gains in technology stocks, as expectations grew for a potential interest rate cut by the US Federal Reserve in December. The Dow Jones Industrial Average gained 0.67%, the S&P 500 rose 0.69%, and the Nasdaq Composite increased by 0.82%.
Domestic Market Performance
On Thursday, the Indian stock market indices ended flat with a positive bias after hitting record highs in intraday trade. The Sensex gained 0.13% to close at 85,720.38, while the Nifty 50 settled 0.04% higher at 26,215.55. Analysts anticipate the positive momentum to continue, with the Nifty 50 potentially advancing towards the 26,500 mark.
Additional Factors
- US-China Trade Talks: US President Donald Trump urged China to increase purchases of US goods.
- India-EU FTA: India and the European Union aim to finalize Free Trade Agreement negotiations by the end of the year.
- IMF on India's GDP: The International Monetary Fund estimates India's economy will grow 6.6% in FY26.
Overall, the Indian stock market is expected to open marginally higher, influenced by positive global cues and domestic factors. Investors are advised to monitor global events, economic indicators, and commodity prices to make informed decisions.
