- India’s Nifty and Sensex recover early losses on Tuesday.
- Nifty and Sensex fell on Monday on a profit-taking spree and cautious global markets.
- Nifty and Sensex traders await the US inflation data for a fresh take on market sentiment.
The Sensex 30 and Nifty 50, India’s key benchmark indices, are attempting a Tuesday turnaround, having opened on a tepid footing. Cautious trading on their Asian counterparts could act as a headwind for the recovery in the indices.
At the time of writing, the National Stock Exchange (NSE) Nifty 50 index is adding 0.54% on the day to trade at 21,733.80. The Bombay Stock Exchange (BSE) Sensex 30 is following suit, rising 0.66% to 71,542.63.
Stock market news
- Nifty and Sensex are capitalizing on news that Index provider MSCI raised India’s weightage in its Global Standard index to an all-time high of 18.2%.
- Coal India, UPL, ICICI Bank, Apollo Hospitals and Hero MotoCorp are among the top gainers on the Nifty so far while losers are Hindalco Industries, Grasim Industries, Adani Enterprises, HCL Technologies and Tech Mahindra.
- Shares of Paytm dipped by over 8.0% after the downgrade. India’s Multi Commodity Exchange (MCX) index will open at 0730 GMT due to technical glitches.
- 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 on Monday.
- 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 one 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.
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