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Indian equity indices BSE Sensex and NSE Nifty50 were lower at market open on Tuesday
Sensex Today
Sensex Today: Indian equity indices BSE Sensex and NSE Nifty50 were lower at market open on Tuesday, amid weak global cues, as several international markets were closed on New Year’s Eve, making for thin trading around the world.
Vikram Kasat, Head – Advisory, PL Capital – Prabhudas Lilladher, said: “Benchmark indices ended the week’s first trading session in the red, with the BSE Sensex shedding 450.94 points (0.57%) to close at 78,248.13 and the NSE Nifty 50 falling 168.50 points (0.71%) to settle at 23,644.90. The day clearly belonged to the bears, as markets grappled with thin year-end volumes, a weakening rupee, and sustained foreign institutional investor (FII) outflows. The rupee’s slide toward the 86-per-dollar mark has further dampened the appeal of Indian equities for foreign institutional investors (FIIs), as returns in dollar terms continue to shrink. Meanwhile, the US Dollar Index (DXY) climbed to 108.04, underscoring the greenback’s sustained strength. In domestic currency trading, the rupee weakened slightly, trading at 85.5675 against the dollar. As 2024 nears its close, market sentiment remains fragile, with volatility taking centre stage. Key upcoming data, including December quarter earnings, are expected to provide much-needed direction to the markets.”
Global Cues
As most major markets in the Asia-Pacific region remained closed on Tuesday for the New Year’s Eve holiday, the Australian market opened lower on the final trading day of the year. The S&P/ASX 200 was down by 0.56% on the shortened trading day.
Markets in Japan and South Korea were closed for the holiday, while Hong Kong had a shorter trading session.
Meanwhile, China’s November factory activity growth fell short of analysts’ expectations on Tuesday, raising concerns about the adequacy of Beijing’s stimulus measures to effectively address the country’s struggling economy. The official Purchasing Managers’ Index (PMI) for December stood at 50.1, slightly below the expected 50.3 and the previous month’s 50.3. As a result, the CSI 300 index declined by 0.51%, while the Shanghai Composite saw a slight gain of 0.08%.
Global stocks continued their downward trend for the third consecutive session on Monday, as elevated US Treasury yields prompted profit-taking at the end of a strong year for equities. All three major US indices closed with sharp losses, with consumer discretionary stocks leading the declines. The 10-year US Treasury yield, which recently rose above 4.5%, following the Federal Reserve’s signal on December 18 to slow the pace of interest rate cuts, has raised concerns about high stock market valuations.
The Dow Jones Industrial Average fell by 418.48 points, or 0.97%, to 42,573.73, while the S&P 500 dropped 63.90 points, or 1.07%, to 5,906.94, and the Nasdaq Composite lost 235.25 points, or 1.19%, to 19,486.79.
For the S&P 500, this marked the first instance in at least 72 years where the index experienced two declines in the last five trading days of the year, according to Bespoke Investment Group.
Julian Emanuel, Senior Managing Director at Evercore ISI, pointed out in a Sunday note that rising bond yields are the primary challenge to the ongoing cyclical bull market, with key yield levels to watch at 4.5%, 4.75%, and 5%.
US stocks have performed well in 2024, with the S&P 500 up about 24%, driven by growth expectations in artificial intelligence, anticipated rate cuts from the Federal Reserve, and expectations of deregulation policies under the incoming Trump administration. However, the Fed’s economic forecast, combined with concerns about inflationary pressures from President-elect Donald Trump’s potential policies, has pushed yields higher. The 10-year yield hit 4.641% last week, its highest level since May 2.
Despite these concerns, US yields fell on Monday, with a brief further decline following data showing that business activity in the US Midwest contracted more than expected in December. Additional data revealed that US pending home sales rose more than expected in November, marking a fourth straight month of gains as buyers took advantage of better inventory despite elevated mortgage rates.
MSCI’s global stock index lost 7.33 points, or 0.86%, to 844.29, but still posted a 16% gain for the year.
With many markets preparing for the New Year holiday, trading volumes remained subdued. Markets in Germany, Italy, and Switzerland were closed on Tuesday, while those in the UK and France had half-day sessions.
European stocks also saw declines, partly due to elevated yields, with the 10-year German bund yield holding near six-week highs. The pan-European STOXX 600 index closed 0.46% lower, snapping a three-session winning streak.
Bond investors are also cautious of increasing supply, particularly with Trump’s promises for tax cuts without clear plans for controlling government spending. The US 10-year bond yield dropped 7.6 basis points to 4.543%.
The widening interest rate differentials have increased the appeal of the US dollar, with the dollar index rising by 6.5% for the year.
In commodities, US crude settled at $70.99 a barrel, up by 0.55%, while Brent crude rose by 0.3% to $74.39 per barrel.
