N※N

Show Stocks and Investing Publications

GIFT Nifty Signals Weak Market Open Amid Trump Tariff Fears

Market Outlook: GIFT Nifty Signals Weak Opening Amid Trump Tariff Warnings and Global Cues

As Indian stock markets prepare to open for another trading session, investors are bracing for potential volatility driven by a mix of domestic and international factors. The GIFT Nifty, a key indicator for the Indian benchmark indices, is trading lower, suggesting a subdued start for the Sensex and Nifty 50. This comes against the backdrop of renewed global uncertainties, particularly warnings from US President-elect Donald Trump about imposing tariffs on major trading partners. With Wall Street ending mixed overnight and Asian markets showing varied trends, the stage is set for a cautious approach among traders. In this analysis, we delve into eight critical cues that could shape market movements today, providing a comprehensive overview of the forces at play.

First and foremost, the GIFT Nifty futures are pointing towards a negative opening for Indian equities. As of early morning, GIFT Nifty was down by around 50 points, reflecting bearish sentiment from overnight global developments. This index, traded on the NSE International Exchange in Gujarat's GIFT City, often serves as a reliable precursor to the domestic market's direction. The dip is largely attributed to profit-taking in global markets and concerns over escalating trade tensions, which could ripple through to emerging markets like India.

A significant cue stems from Donald Trump's recent tariff warnings. The incoming US administration has signaled intentions to slap hefty tariffs on imports from China, Mexico, and Canada, potentially disrupting global supply chains. Trump, in a series of social media posts, warned of 25% tariffs on Mexican and Canadian goods unless they address issues like illegal immigration and drug flows, while reiterating a 60% levy on Chinese imports. This rhetoric has spooked investors worldwide, as it revives fears of a trade war reminiscent of his first term. For India, this could have dual implications: on one hand, it might divert some trade opportunities towards Indian exporters; on the other, it could lead to broader market instability, affecting foreign institutional investor (FII) flows into emerging markets.

Overnight, Wall Street provided mixed signals that are influencing Asian sentiment. The Dow Jones Industrial Average slipped by 0.3%, dragged down by losses in financial and energy stocks, while the S&P 500 managed a marginal gain of 0.1%, buoyed by tech sector resilience. The Nasdaq Composite rose 0.3%, with gains in megacap technology shares like Apple and Nvidia offsetting broader concerns. However, the overall mood was tempered by rising US Treasury yields and anticipation of the Federal Reserve's next moves on interest rates. Investors are closely watching for any hints from Fed Chair Jerome Powell on rate cuts, especially after recent data showed US inflation cooling but economic growth remaining robust.

In Asia, markets are displaying a patchwork of performances this morning. Japan's Nikkei 225 is up modestly by 0.5%, supported by a weaker yen that benefits exporters. However, South Korea's Kospi is down 0.4%, and Hong Kong's Hang Seng has dropped 0.7%, primarily due to tech stock sell-offs amid US-China trade jitters. China's Shanghai Composite is trading flat, as investors digest domestic stimulus measures against the tariff threats. These divergent trends underscore the uneven impact of global cues, with India likely to mirror the cautious tone seen in other emerging markets.

Domestically, foreign institutional investors (FIIs) continue to be a pivotal factor. In the previous session, FIIs were net sellers, offloading equities worth approximately Rs 1,200 crore, extending their selling streak amid global uncertainties. This contrasts with domestic institutional investors (DIIs), who remain net buyers, providing some cushion to the market. The ongoing FII outflows, driven by higher US bond yields and a stronger dollar, have pressured the rupee, which weakened to around 84.50 against the US dollar. Currency fluctuations could further influence sectors like IT and pharmaceuticals, which are export-oriented.

Oil prices are another cue to watch, as they hover near two-week highs. Brent crude futures are trading above $73 per barrel, up slightly due to supply disruption fears from geopolitical tensions in the Middle East and potential impacts from Trump's policies. Higher oil prices could inflate India's import bill, stoking inflationary pressures and affecting energy-dependent sectors. Conversely, a stable rupee might mitigate some of these effects, but any sharp rise in crude could weigh on market sentiment.

On the macroeconomic front, India's Q2 GDP data, released recently, showed growth slowing to 5.4%, below expectations, which has already factored into investor caution. Upcoming data points, such as manufacturing PMI and auto sales figures, could provide fresh insights. Additionally, the Reserve Bank of India's (RBI) monetary policy stance remains in focus, with no immediate rate cuts expected due to persistent food inflation. Analysts suggest that if global risks escalate, the RBI might adopt a more accommodative approach in future meetings.

Sector-specific developments are also noteworthy. Banking stocks could face headwinds from rising bond yields, which squeeze net interest margins. The IT sector, however, might find support from a depreciating rupee, enhancing earnings for companies like TCS and Infosys. Auto and consumer goods sectors are eyeing festive season demand trends, while realty could benefit from any positive urban development announcements.

Finally, technical indicators for the Nifty 50 suggest it is trading near key support levels around 23,800, with resistance at 24,200. A breach below support could trigger further downside, potentially towards 23,500, while positive global triggers might push it higher. Volatility, as measured by the India VIX, has risen slightly to 14.5, indicating heightened uncertainty.

In summary, today's market opening is likely to be influenced by a confluence of bearish global cues, led by GIFT Nifty's downturn and Trump's tariff threats. While domestic resilience from DII buying offers some buffer, investors should remain vigilant for intraday swings. Long-term bulls might view any dips as buying opportunities, particularly in undervalued sectors, but the near-term outlook leans cautious. As always, staying attuned to evolving news flows will be crucial for navigating these dynamics. This setup highlights the interconnectedness of global economies, where US policy shifts can profoundly impact markets halfway around the world. (Word count: 928)

Read the Full The Financial Express Article at:
[ https://www.financialexpress.com/market/how-will-markets-open-today-gift-nifty-down-trump-tariff-warning-and-8-cues-at-this-hour-3937664/ ]