GIFT Nifty falls, signals weak start for Sensex and Nifty as tech stocks fall after US Fed holds rates
GIFT Nifty witnessed a moderate fall on Thursday morning, signalling a weak start for Indian benchmark equity indices Sensex and Nifty. The expectations of a December rate hike by the US Fed could keep investors cautious, while elevated crude oil prices remain a key headwind.
Indian benchmark indices Sensex and Nifty are likely to open on a slightly negative note on Thursday, with GIFT Nifty signalling a weak start amid mixed Asian markets and renewed selling in global technology stocks. Disappointing earnings from major artificial intelligence-related companies have dampened sentiment, while the US Federal Reserve's decision to hold interest rates steady and expectations of a December rate hike could keep investors cautious.
A modest decline in crude oil prices may offer some relief, although geopolitical tensions remain a concern. GIFT Nifty was trading at 22,683 around 7:40 am, down 50 points, or 0.22 percent. Indian equities ended lower on Wednesday, with the Sensex declining 352.64 points, or 0.48 percent, to 73,246.03 and the Nifty falling 50.90 points, or 0.22 percent, to 22,698.85. Foreign institutional investors bought equities worth Rs 871 crore, extending their buying streak, while domestic institutions also turned net buyers, purchasing shares worth Rs 643 crore.
Asian equities traded mixed on Thursday as disappointing earnings from major technology companies revived concerns over the enormous investments being made in artificial intelligence. South Korea's Kospi fell 1.8 percent, dragged down by Samsung Electronics, whose shares declined more than 3 percent after the company's profit missed market expectations. Nikkei 225 futures edged 0.1 percent higher, while Hong Kong's Hang Seng was little changed and the Shanghai Composite advanced 0.9 percent.
The broader MSCI Asia Pacific Index slipped 0.1 percent, reversing earlier gains. US technology futures weakened after Alphabet's shares plunged 10 percent in extended trading following disappointing sales at Google's parent company. Nasdaq 100 futures fell 1 percent, while S&P 500 futures declined 0.3 percent. US stock indices ended higher on Wednesday after the Federal Reserve left its benchmark interest rate unchanged, in line with market expectations.
The gains came before renewed pressure on technology stocks in extended trading. The Dow Jones Industrial Average gained 97.53 points, or 0.19 percent, to 52,475.10, while the S&P 500 advanced 21.37 points, or 0.28 percent, to 7,743.97. The Nasdaq Composite rose 72.04 points, or 0.27 percent, to 26,549.85. The Federal Open Market Committee voted 10-2 to maintain the federal funds rate at 3.75–4 percent, leaving borrowing costs unchanged.
In its post-meeting statement, the Fed indicated that incoming economic data over the coming weeks would help guide its next policy decision. Financial markets are now pricing in an 85 percent probability of a 25-basis-point rate hike at the Fed's December meeting, according to CME's FedWatch tool, as reported by Reuters. Crude oil prices declined on Thursday, reversing some of the previous session's gains, but still remained elevated.
Brent crude futures fell 82 cents, or 0.7 percent, to $114.50 a barrel, while West Texas Intermediate declined $1.04, or 1 percent, to $101.74 a barrel. Ponmudi R, CEO of Enrich Money, expects Indian equities to remain range-bound and volatile as investors assess global monetary policy developments alongside persistent macroeconomic and geopolitical uncertainty. He said crude oil is a key headwind for domestic markets, warning that elevated energy prices could restrict the scope for a sustained recovery.
According to Ponmudi, even positive cues from regional markets may not be sufficient to support a durable upward move while geopolitical risks and high crude prices persist.
