Here's a look at ten key factors that have influenced the Indian stock market overnight:
1. Gift Nifty Indicates Positive Start:
The Gift Nifty was trading near 24,810, approximately 120 points higher than the previous Nifty futures close, suggesting a potentially positive opening for Indian markets. The GIFT Nifty, formerly known as SGX Nifty, is a derivative contract linked to India's Nifty 50 index. It is now traded on the NSE International Exchange (NSE IX) in Gandhinagar, India. The relocation of Gift Nifty to NSE IX is a significant shift in the Indian financial market landscape. Hedge funds and institutional investors use Gift Nifty as a strategic tool to hedge their exposure to the Indian stock market. Traders also actively engage with Gift Nifty to speculate on the future direction of the Nifty 50 index, using its movements to inform their trading decisions.
2. Overnight Wall Street Performance:
US stocks closed higher on Friday, with the Dow Jones Industrial Average surging by 299.97 points (0.65%) to close at 46,247.29. The S&P 500 was up by 38.98 points (0.59%), ending at 6,643.70, and the Nasdaq Composite finished higher by 99.37 points (0.44%) at 22,484.07. However, all three major indexes ended the week lower, with the S&P 500 and Nasdaq breaking their three-week winning streaks.
3. Looming US Government Shutdown:
The US faces a potential government shutdown as the September 30 funding deadline approaches. Without a deal, the government will shut down on October 1. President Donald Trump is scheduled to meet with Democratic and Republican leaders in Congress to negotiate an extension. A shutdown could introduce uncertainty for markets, but historically, these have been short-lived with minimal economic impact. Sectors heavily reliant on government contracts, such as defense and life sciences, may be more sensitive to shutdowns. A shutdown could also delay the release of key economic data.
4. Trump's Tariff Measures:
Shares of Indian pharmaceutical companies experienced a downturn following President Trump's announcement of a 100% tariff on branded and patented pharmaceutical drugs, set to take effect on October 1, 2025. However, sentiment improved after clarification that the tariffs would only apply to branded and patented drugs, not generic medicines, which constitute a significant portion of Indian exports to the US. Analysts anticipate minimal impact on Indian pharma companies due to their focus on the generics market.
5. US Inflation Data:
The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge, rose 0.3% in August, following a 0.2% increase in July.
6. RBI's Monetary Policy:
Investors are closely monitoring the Reserve Bank of India's (RBI) monetary policy. The Monetary Policy Committee (MPC) is expected to maintain stable repo rates amidst global uncertainties, but the policy commentary's tone will be crucial.
7. India-US Trade Deal Progress:
Developments regarding the India-US trade deal are being closely watched.
8. Global and Domestic Macroeconomic Indicators:
Both domestic and global macroeconomic indicators will be key triggers for the market.
9. Foreign Fund Flows and Geopolitical Developments:
Foreign fund flows, trends in gold prices, and major geopolitical events are also important factors.
10. US Interest Rates and FPI Flows:
Higher US interest rates could lead to a reduction in Foreign Portfolio Investment (FPI) flows into Indian markets. However, some experts believe that the uncertainty surrounding the US government shutdown is unlikely to significantly impact Indian markets.
