The domestic equity markets, including Sensex and Nifty 50, are expected to experience heightened volatility on Thursday, with mixed global cues following the results of the 2024 U.S. presidential election.
Asian markets traded lower, while U.S. stock markets surged overnight, with both the Dow Jones and S&P 500 registering their largest single-day percentage gains since November 2022.
Republican candidate Donald Trump emerged as the frontrunner, securing a significant number of electoral votes, which has added another layer of uncertainty for global markets.
Investors are now turning their attention to the U.S. Federal Reserve’s monetary policy announcement scheduled for today. A 25 basis point rate cut is widely anticipated, though market expectations for further cuts in December and next year have been dialed down, according to CME’s FedWatch Tool.
The Indian stock market saw a strong rally on Wednesday, marking its largest single-day gain in over six weeks. The Nifty 50 rose by 1.12% to close at 24,484, and Sensex climbed 1.13% to finish at 80,378, indicating a rebound from recent losses.
Positive sentiment was also reflected across sectoral indices, particularly in IT, Realty, Auto, Metals, and PSU Banks, with the Midcap and Smallcap indices outperforming the broader market.
However, amidst the rally, the Indian rupee reached a new low of 84.30 against the U.S. dollar, reflecting the greenback’s strength following Trump’s surge in the election race.
The diverging activities of Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) also added to market dynamics, with DIIs providing buying support amid continued FII outflows.
Disclaimer on Data Accuracy – The data and information provided in this article are based on sources believed to be reliable. Market conditions are subject to rapid change, and errors or omissions may occur. Readers should verify the data independently before making any investment decisions.
Global Market Cues
Markets worldwide saw a rally as former U.S. President Donald Trump took a decisive lead in the presidential race, surpassing the critical 270 electoral vote threshold.
This development is expected to influence Friday’s global markets, with investors also anticipating the upcoming interest rate decisions from the U.S. Federal Reserve and the Bank of England. The Fed may potentially announce a 25 basis point rate cut.
On Thursday morning, however, Asian markets displayed mixed responses following record-setting rallies in the U.S.
Japan’s Nikkei 225 dropped to 39,030, trading at 39,295 0.46% down 07: 32 am IST. South Korea’s Kospi declined by 0.4% to 2,554.57, and Australia’s S&P/ASX 200 increased by 0.1% to 8,191.00.
Chinese markets also saw declines, with Hong Kong’s Hang Seng index down by 0.7% to 20,386.36 and the Shanghai Composite falling by 0.7% to 3,359.99.
There is investor attention on potential changes in U.S. economic policy under Trump. Proposed trade tariffs, including possible increases on Chinese imports, may impact both Chinese economic activity and inflationary pressures in the U.S.
Should these policies be paired with tax reductions and regulatory adjustments, there could be an effect on economic growth, with the potential for increased trade tensions globally.
The U.S. stock market reacted positively, with the S&P 500 rising 2.5% to a record 5,929.04, the Dow Jones climbing 3.6% to 43,729.93, and the Nasdaq advancing 3% to a new high of 18,983.47.
The dollar index, which tracks the U.S. dollar against six key currencies, saw a slight decline of 0.05% to 105.06. This came after it surged to a peak of 105.44 in the previous session, marking its highest level since July 3.
Potential tax cuts and tariff policies are influencing U.S. Treasury yields, seen in the increase of the 10-year Treasury yield to 4.43% from 4.29%, reflecting market anticipation of possible fiscal shifts.
As investors await Thursday’s Fed announcement, the prospect of a rate cut appears to support optimism in equities despite inflation considerations.
The U.S. dollar remained steady against the yen at 154.63 early Thursday, while the euro saw minimal movement at $1.0728. In commodities, U.S. crude oil rose by 2 cents to $71.71 per barrel, and Brent crude increased by 24 cents to $75.16.
Trump’s anticipated protectionist policies and possible tariffs could present challenges for emerging markets with significant U.S. trade dependencies, including India.
Ross Maxwell from VT Markets notes, “India could face inflationary pressures and capital outflows due to a stronger dollar.”
Key sectors, like pharmaceuticals and IT, may also experience impacts if tariffs increase or if immigration policies restrict skilled labor mobility.
A stronger stance on China could position India to benefit as global supply chains diversify. Nomura highlights India’s large consumer market and recent manufacturing reforms as factors that may make it an appealing alternative to China, especially in areas like defense, technology, and pharmaceuticals.
Trump’s stated intentions to work toward resolutions in conflicts such as Russia-Ukraine, alongside continued support for allies including Israel and Taiwan, may shape global stability in the longer term.
While the outcome remains uncertain, these potential shifts could contribute to an improved economic environment if geopolitical tensions ease.
GIFT Nifty Update
GIFT Nifty is currently trading around the 24,470 level at 08:06 am IST, reflecting a discount of approximately 102 points compared to the previous close of Nifty futures. This suggests a negative start for the Indian stock market indices as the session begins.
Previous Day Analysis
The Indian stock market saw a notable rally on Wednesday, marking its largest single-day gain in over six weeks, as market sentiment improved amid global developments.
The Nifty 50 index rose by 1.12% to close at 24,484.05, while the Sensex gained 1.13%, ending the day at 80,378.13. This was the strongest performance since September 20, helping to offset recent declines driven by foreign outflows and mixed corporate earnings.
On Wednesday, all sectoral indices posted gains, led by IT, Realty, Auto, Metals, and PSU Banks. The Midcap and Smallcap indices outperformed with gains exceeding 1.9%.
More than 200 stocks, including Coforge, City Union Bank, and National Aluminium Company, hit fresh 52-week highs, signaling strong interest in a broad range of sectors.
In sectoral highlights, the Nifty IT, Oil & Gas, and Realty indices led gains, rising by 4.08%, 2.51%, and 2.60%, respectively.
Major contributors to the Sensex gains included tech heavyweights like Infosys, TCS, and HCL Tech, which provided significant support. However, stocks like Titan, IndusInd Bank, and HDFC Bank ended with minor losses.
Investor sentiment was further supported by a rise in overall market capitalization, which increased by Rs 8 lakh crore to reach Rs 453 lakh crore.
Meanwhile, the rupee declined to a record low of 84.30 against the US dollar, reflecting the dollar’s strength amid evolving global economic conditions.
Some market participants believe that recent developments in global trade and policy outlooks may bring greater stability to financial markets, influencing investor confidence across various sectors.
FII and DII Activity
On November 6, 2024, Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) demonstrated contrasting activity in the Indian equity markets.
FIIs continued their selling trend, recording net sales of Rs 4,446 crore. Meanwhile, DIIs emerged as net buyers, purchasing shares worth Rs 4,889 crore, providing some support to the domestic markets amidst foreign outflows.
During the trading session, DIIs bought Rs 16,062 crore in equities and sold Rs 9,486 crore. In contrast, FIIs purchased shares worth Rs 11,912 crore but sold Rs 16,357 crore, reflecting their cautious outlook on Indian equities amid evolving global market conditions.
Year-to-date, FIIs have net sold shares valued at Rs 2.65 lakh crore, while DIIs have been steady buyers, accumulating Rs 5.34 lakh crore in shares.
The sustained buying support from DIIs has helped offset the impact of FII outflows, contributing to market stability despite fluctuations driven by global volatility and economic developments.
Disclaimer – The technical outlook provided in this section is based on current market data and analysis. It is intended for informational purposes only and should not be considered as investment or trading advice. Technical analysis involves inherent risks and does not guarantee future market performance. Market conditions may change rapidly, and past performance is not indicative of future results. Readers are advised to conduct their own research and consult with a professional financial advisor before making any investment decisions.
Technical Outlook on Nifty
The Nifty 50 closed at 24,484, showing stability below key moving averages that may influence its near-term direction.
Reviewing Simple Moving Averages (SMA) on the daily chart, the index is positioned near the 5-day SMA at 24,240 and the 10-day SMA at 24,292, providing immediate reference points.
However, it remains below the 20-day SMA of 24,567, the 50-day SMA of 25,050, and the 100-day SMA of 24,696, signaling cautious momentum.
The Relative Strength Index (RSI) stands at 46.05, placing the index in a neutral zone, where it is neither overbought nor oversold. This neutrality could allow for directional shifts based on future price action.
From a weekly pivot perspective, the key pivot point (P) is situated at 24,728. If the index surpasses this level, it may encounter resistance at R1 (25,384) and R2 (26,562), which represent potential higher boundaries.
On the downside, support levels are marked at S1 (23,550) and S2 (22,895), which could provide stabilization points if the index moves lower.
Technical Outlook on Bank Nifty
Bank Nifty closed at 52,317, positioned above all major Simple Moving Averages (SMAs) on the daily chart, which may suggest potential strength in the near term.
The index is trading above its 5-day SMA at 51,777, 10-day SMA at 51,659, 20-day SMA at 51,633, 50-day SMA at 51,920, and 100-day SMA at 51,711, showing alignment that reflects a sustained bullish trend across short- and medium-term SMAs.
The Relative Strength Index (RSI) for Bank Nifty stands at 54.66, just above the neutral 50 level, indicating a moderately positive sentiment without reaching overbought conditions.
Key weekly pivot levels outline potential support and resistance points. The primary pivot point (P) is at 51,634, close to the current closing level, suggesting it as a possible support in case of minor pullbacks.
Should the index hold above this pivot, it could move toward the first resistance (R1) at 53,075, with an additional target (R2) at 54,675, highlighting an area of further upward potential.
On the other hand, if it falls below the pivot, support may be found at S1 (50,034), with a lower support level at S2 (48,594), marking possible thresholds for correction.
For traders, monitoring these pivot levels alongside the RSI may help assess shifts in momentum or potential trend changes in the sessions ahead. The alignment of SMAs above the closing price, combined with a neutral-to-positive RSI, supports a cautiously optimistic outlook.
OI Data Analysis
Recent analysis of Nifty’s derivatives open interest (OI) data reveals significant strike prices that may influence upcoming market movements:
- Call Side OI: The highest open interest on the call side is concentrated at the 24,500, 24,800, and 25,000 strike prices. These levels indicate potential resistance, suggesting where sellers may expect the index to encounter challenges if it trends upward.
- Put Side OI: On the put side, notable open interest appears at the 24,200, 24,000, and 23,500 strike prices, reinforcing these areas as potential support zones for the index.
Disclaimer – The content on MarketScope Daily is for informational purposes only and does not constitute financial, investment, or trading advice. While we strive for accuracy, the information presented may not be complete or current. MarketScope Daily and its authors are not responsible for any decisions made based on the content. Readers are encouraged to conduct their own research or consult a qualified financial advisor before making any investment decisions. All views and opinions expressed are those of the authors and may be subject to change without notice.
