The Indian stock market is influenced by a complex interplay of domestic and global factors. Several key elements have contributed to overnight shifts in market sentiment, ranging from GIFT Nifty performance to U.S. economic data and fluctuations in gold prices. Here's a breakdown of ten significant factors impacting the Indian stock market:
1. GIFT Nifty Performance:
The GIFT Nifty, formerly known as SGX Nifty, serves as an early indicator of how the Indian market might open. It's a derivative contract linked to India's Nifty 50 index, traded on the NSE International Exchange (NSE IX) in Gujarat. On August 21, 2025, Gift Nifty was trading around 25,095, a discount of nearly 27 points from the Nifty futures' previous close, suggesting a potentially muted start for Indian markets. A strong GIFT Nifty performance often signals a bullish opening for the Nifty 50.
2. US PMI Data:
Purchasing Managers' Index (PMI) data from the United States can influence the Indian Rupee and, consequently, the stock market. Investors closely monitor US PMI data to gauge the overall business activity and the impact of tariffs. On August 21, 2025, investors were awaiting flash private sector PMI data for August from both India and the United States.
3. US Jobless Claims:
U.S. jobless claims data, released weekly by the U.S. Department of Labor, indicates the number of people who applied for unemployment insurance for the first time. Higher-than-expected jobless claims suggest a weakening economy, which is generally negative for the USD. The U.S. initial jobless claims data is closely watched by investors and policymakers as an indicator of the labor market's health.
4. Wall Street Performance:
The performance of major US stock market indices like the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite impacts Indian market sentiment. On August 21, 2025, US stock markets closed lower, influenced by concerns about potentially hawkish remarks from the Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Policy Symposium.
5. Asian Market Cues:
Mixed cues from Asian markets can lead to a flat opening for the Indian stock market. On August 22, 2025, Asian markets traded mixed ahead of Powell's speech.
6. Crude Oil Prices:
Changes in crude oil prices can affect the Indian stock market. Brent crude gained 0.15% to $66.94/barrel, while US West Texas Intermediate (WTI) crude was trading 1.38% higher at $63.21/barrel on August 21, 2025.
7. Gold Prices:
Fluctuations in gold prices can impact stock market returns. Gold is often considered a safe-haven asset during economic downturns or periods of market volatility. Spot gold was trading down by 0.1% at $3,343.09/oz, and US gold futures were trading 0.1% lower at $3,386.10 on August 21, 2025.
8. RBI and US Fed Meeting Minutes:
The minutes from the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) and the US Federal Reserve's meetings can influence market sentiment. The US Federal Reserve's July meeting minutes revealed that most policymakers viewed inflation risks as outweighing concerns about the labor market.
9. Core Sector Data:
Growth in India's core infrastructure sectors can provide insights into the overall health of the economy. Growth in India's eight core infrastructure sectors slowed to 2% in July 2025.
10. Global Economic Events:
Major global events and economic data releases drive market sentiment. Japan's manufacturing activity contracted for a second straight month in August, with the S&P Global flash Manufacturing PMI rising to 49.9 from July's 48.9 but staying below the 50-mark threshold. Investors are also awaiting the start of the Federal Reserve's Jackson Hole symposium.
These factors collectively shape the dynamics of the Indian stock market, making it essential for investors to stay informed about both domestic and global developments.
