After yesterday’s sharp rally, domestic stock markets opened with losses on Wednesday (February 4) due to profit-booking. Sensex opened 500 points lower and Nifty 120 points lower, but later some recovery was seen from lower levels. The IT index fell more than 5.7% at the open. HCL Tech, Infosys, TCS, Tech Mahindra, Wipro, Bajaj Finance, Bajaj Finserv and Kotak Mahindra Bank were among the top Nifty losers today. ONGC, Coal India, M&M, Power Grid, Grasim, ITC and Tata Steel were among the top Nifty gainers.
There are some bearish signals. GIFT Nifty was down. US markets witnessed a decline yesterday due to selling in the IT sector. A major update on India’s trade deal with the US, strong return of foreign investors, weakness in US markets, sharp rise in commodities and RBI policy meeting – all these factors can decide the direction of today’s trading. It will be important to keep an eye on sectoral movements along with Nifty and Bank Nifty.
Big statement on trade deal with America
Commerce Minister Piyush Goyal said that India can sign a trade deal with America in the next 2-3 days. Farmers, dairy sector and fishermen are especially expected to benefit from this deal. Trade deal may increase exports and stocks related to agriculture and food processing may rise.
Strong return of FIIs
Foreign investors bought shares worth about ₹5,236 crore in the cash market, which is considered to be the biggest purchase in the last three months. Including index and stock futures, FIIs have invested a total of over ₹16,750 crore in the market. Domestic institutional investors also bought shares worth more than ₹1,000 crore. This strengthened the risk-on sentiment in the market.
Weak signals from US markets
Selling dominated in US tech stocks. The Nasdaq fell nearly 350 points. The Dow Jones closed nearly 170 points down, slipping nearly 400 points from its day’s high. Pressure on tech and growth stocks is having little impact on global sentiment.
Asian Signals and GIFT Nifty
GIFT Nifty was trading flat near 25,800. Dow futures rose nearly 50 points, but Japan’s Nikkei fell nearly 400 points. Mixed signals from Asian markets suggest a range-bound opening in the domestic market.
Historic rise in gold and silver
In the domestic market, gold rose by about ₹10,000 and closed near ₹1,54,000. Silver also rose by about ₹32,000, taking prices beyond ₹2,68,000. In the international market, gold rose by about $300 to above $4,950, while silver rose by about 10% to near $85. Demand for safe haven investments and a weak dollar supported bullion.
Metals shine due to dollar weakness
Base metals benefited from the weak dollar. Copper rose nearly 4% on LME. Aluminum and nickel also increased by about 2%. Crude oil also rose about 2% to near $68 per barrel. The action is likely to continue in metal and energy stocks.
pressure in crypto market
Selling pressure dominates the crypto market. Bitcoin fell nearly 4% to below $75,000, close to its 14-month low. Weakness in risk assets is causing the cryptocurrency to decline.
impact of results
AB Capital and Mankind Pharma announced good December quarter results. Bajaj Finance and Pidilite’s results were mixed. Today, the market will keep an eye on the results of Bajaj Finserv and Trent, which will be released after market close. The futures market will also focus on the results of Bajaj Holdings, Cummins, NHPC, Tata Power, Tube Investments and Samman Capital.
Focus on RBI MPC meeting
The three-day Monetary Policy Committee (MPC) meeting of the Reserve Bank of India (RBI) is starting from today. The market is hopeful that this time there may be indications of increasing liquidity in the policy. RBI’s stance on interest rates will decide the direction of banking and financial stocks.
Overall market outlook
Overall, strong buying by FIIs and positive expectations related to trade deals may support the market, while weakness in US markets and pressure in the crypto market may indicate some caution. Sector-specific action and outcome-based fluctuations are likely to be more prominent in today’s trading session.