Nifty and Sensex eye a muted open on subdued SGX Nifty futures

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  • India’s Nifty and Sensex set off the week on the wrong footing.
  • Nifty and Sensex declined on a rush for profit taking and cautious trends in global markets.
  • SGX Nifty futures point to a tepid start for Nifty and Sensex on Tuesday.

Futures on SGX Nifty, also known as Singapore Nifty, are trading marginally lower on the day, suggesting a tepid start for India’s benchmark Nifty 50 index and Sensex 30 index on Tuesday.

The National Stock Exchange (NSE) Nifty 50 index lost 0.76% of its value on Monday to settle at 21,616.05. The Bombay Stock Exchange (BSE) Sensex 30 finished 0.73% lower on the day at 71,072.49.

Stock market news

  • Heavyweight banks, metals and mining companies were the main laggards while pharma and technology sectors helped cap the downside on Monday.
  • Major gainers included Dr. Reddy’s laboratories (3.41%), Apollo Hospitals (2.80%), Wipro (2.52%), Divis laboratories (2.29%), HCl technologies (2.41%).
  • Major losers included Coal India (-4.76%), Hero Motocorp (-4.37%), Bharat Petroleum Corporation (-3.32%), Oil and Natural Gas Corporation (-3.25%), IndusInd Bank (-2.56%).
  • The Initial Public Offer (IPO) of Alpex Solar Limited received an overwhelming response from the investors as it recorded 303 times subscriptions till the final day of bidding.
  • Rush for profit taking and mixed trends in global markets could be attributed as key factors behind the recent correction in Nifty and Sensex.
  • The Indian markets have extended their lead to the highest ever over Hong Kong when it comes to daily trading volumes. While India’s benchmark Nifty was up 22% in the past year, Hong Kong’s Hang Seng eroded nearly 25%.
  • On Monday, India’s Consumer Price Index (CPI) Inflation declined to a three-month low of 5.1% in January but remains within the Reserve Bank of India’s (RBI) tolerance band of 4 (+/- 2)% for the fifth straight month.
  • The Lunar New Year holidays in China and some of the major Asian markets could keep the liquidity thin around the Indian indices. However, traders look forward to Tuesday’s US CPI inflation report and Wednesday’s Wholesale Price Index (WPI) release from India for fresh trading impetus.
  • US CPI data is likely to have a significant influence on the US Federal Reserve (Fed) interest rate path, setting the tone for global markets in the coming days.

Indian economy FAQs

The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.

India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.

Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.

India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.