The Indian stock market is influenced by a mix of domestic and global cues. Several overnight developments have the potential to impact trading, including Gift Nifty trends, record highs in the Nasdaq, and the recent US-Vietnam trade deal.
Gift Nifty Signals a Positive Start
The Gift Nifty, formerly known as SGX Nifty, serves as an early indicator of the Indian market's likely performance. On July 2, 2025, Gift Nifty was trading around 25,680, a premium of nearly 37 points from the Nifty futures' previous close, suggesting a positive opening for Indian stock market indices. As of today, it is trading at 25,531.0 USD, a 0.49% fall in the past 24 hours. This index, operating for almost 21 hours, helps investors align with international market timings. Strategically, the shift of Nifty derivative trading from Singapore to India enables better regulatory oversight.
Nasdaq's Record Highs
The technology-heavy Nasdaq Composite has recently hit all-time highs, reflecting positive sentiment in the US stock market. On July 3, 2025, the US500 rose to 6231 points, a 0.06% gain from the previous session, and has climbed 4.36% over the past month. The Nasdaq welcomed 142 IPOs this year, raising $19.2 billion, marking the highest volume of listings and capital raise in the first half of the year since 2021. A strong performance in the US market, particularly in the tech sector, often has a positive rub-off effect on Indian equities, especially in the IT sector.
US-Vietnam Trade Deal
President Trump announced a trade agreement with Vietnam on July 2, 2025, imposing a 20% tariff on Vietnamese exports to the U.S. and a 40% tariff on goods transshipped through Vietnam. In return, Vietnam will eliminate tariffs on U.S. goods. This deal is designed to address the trade imbalance between the two countries, with the U.S. having a $123.5 billion trade deficit with Vietnam in 2024. While the deal aims to reduce the transshipment of Chinese goods evading U.S. tariffs, it may also impact Vietnam's export-led growth. Sectors like textiles may face near-term margin pressures, while electronics could see a shift towards high-tech manufacturing. Investors should monitor firms enabling Vietnam's compliance and sectors critical to reducing the trade deficit.
Broader Market Impact
The Indian stock market has shown a strong correlation with the US market, particularly the Nifty 50's movements mirroring the S&P 500. However, the Indian economy is relatively insulated from a US slowdown due to lower trade dependency. Key sectors like IT, pharmaceuticals, textiles, and auto components, which rely heavily on exports, could be affected by a US recession. The US-Vietnam trade deal introduces both opportunities and risks for various sectors, requiring investors to carefully assess the evolving dynamics.
Other Influencing Factors
Besides these major triggers, several other factors could influence market sentiment:
In conclusion, the Indian stock market is influenced by a complex interplay of global and domestic factors. Overnight cues from Gift Nifty, Nasdaq's record highs, and the US-Vietnam trade deal, along with broader economic indicators, will likely shape market dynamics. Investors should closely monitor these developments and adopt a cautious stance, emphasizing stock selection and risk management.
