Opening Bell - Morning Commentary
Indian Market Sentiment Expected to Improve Today
The S&P 500 ended higher on Thursday, lifted by gains in Nvidia, Apple and Tesla, after U.S. President Donald Trump unveiled a roadmap for charging reciprocal tariffs on U.S. trading partners.
Stocks also gained after data showed U.S. producer prices increased in January. Key elements in the core Personal Consumption Expenditures (PCE) index, a measure closely tracked by the U.S. Federal Reserve, were benign.
Initial jobless claims dropped to 213,000 this past week, slightly below estimates of 215,000 and the weekly average for this year of 214,000. Continuing jobless claims, which reflect the number of people currently receiving unemployment benefits, declined to 1.85 million, below forecasts for 1.88 million. These readings, combined with other recent data, indicate that the US labour market remains healthy.
Yields on the 10-year U.S. Treasury bond moved sharply lower following the report, suggesting investors were growing more confident about inflation cooling.
In Global markets, Europe benchmark index STOXX Europe 600 reached a new all-time high on the potential for Ukraine peace talks.
In the commodity space, gold traded higher, while WTI oil was little changed.
Prime Minister Narendra Modi's White House visit proved more constructive than anticipated. During the summit, PM Modi and President Trump set an ambitious goal to double bilateral trade to $500 billion by 2030. However, market sentiment remains fragile amid escalating trade tensions, particularly following President Trump's announcement of planned reciprocal tariffs on countries that impose duties on U.S. imports. As part of efforts to address the trade imbalance, India has committed to increasing its imports of U.S. oil and gas to reduce the deficit between the two nations.
The Nifty extended its downward trajectory for the seventh consecutive session yesterday, marking its most extended decline since November. The index's persistent slump reflects mounting concerns over escalating trade tensions, earnings slowdowns, and sustained foreign portfolio outflows.
Nifty is trading below its 5, 11, and 20-day exponential moving averages, suggesting continued weakness in the short term. The index faced resistance near its 5-day EMA before declining sharply to register its lowest close of the month. The 23,235 level will likely serve as immediate resistance, while 22,800 is likely to act as a crucial support level to monitor in the coming session.
In the first sign of recovery, FPIs started covering their short positions in the derivative markets, and that trend should be accentuated further today. Indian markets are likely to open higher today on the back of positive cues from US and European markets.
