Stock Market Cues: US-Venezuela Oil Tensions, India-New Zealand FTA, US GDP Data Among Other Factors To Watch Today

Stock Market Cues: In the trading session on December 23, the focus will likely be on trade deal-related developments, ongoing geopolitical tensions between the United States and Venezuela, volatility in currency and oil prices among other cues.

In the previous session on December 22, benchmark indices extended their recovery for a second straight session, supported by positive global cues and broad-based buying in IT stocks and index heavyweights.

The Sensex surged 638.12 points, or 0.75 per cent, to settle at 85,567.48, while the Nifty 50 advanced 206 points, or 0.79 per cent, to close at 26,172.40.

The upbeat sentiment was underpinned by rising expectations of a rate cut by the US Federal Reserve. A softer US inflation print, which eased to 2.7 per cent year-on-year, strengthened hopes of further rate cuts next year, possibly as early as January.

Stock Market Cues To Watch On December 23

Here are the key opening cues that are likely to guide investor sentiment on December 23:

India-New Zealand FTA, India-US Trade Talks

Markets are expected to take cues from trade deal-related developments, particularly India’s recently concluded deal with New Zealand and signs of progress in India-US trade negotiations. Union Minister of Commerce and Industry Piyush Goyal confirmed earlier on December 22 that India and the US are in the advanced stages of negotiating a bilateral trade agreement.

“We are already at an advanced stage in our discussions with the US,” Goyal told reporters on the sidelines of an event announcing the conclusion of negotiations for the India-New Zealand free trade agreement (FTA).

Trade Secretary Rajesh Agrawal said the India-New Zealand FTA is likely to be signed within the next three months and is expected to be implemented next year.

US-Venezuela Oil Tensions

Markets are also expected to keep a close watch on developments in the ongoing oil standoff between the US and Venezuela.

“It would be smart” for Venezuelan President Nicolas Maduro to step down, US President Donald Trump said on December 22.

In his latest step to pressurise Venezuela, Trump said the US would retain the crude oil and tankers seized near the country. He added that the “illegal” oil could be sold, kept, or diverted to the strategic petroleum reserve. “We are going to keep it,” he told local reporters, confirming that US authorities are now pursuing a third tanker after already seizing two vessels carrying Venezuelan crude.

Further escalation on this front could raise concerns over global oil supply and influence volatility in crude oil prices.

US GDP Data Today

The US Bureau of Economic Analysis is scheduled to release the September-quarter gross domestic product (GDP) growth data for the world’s largest economy later today.

Any surprise in the numbers could trigger volatility in US bond yields and the dollar, with could have potential spillover effects on emerging markets, including India.

RBI VRR Auction

The Reserve Bank of India (RBI) will conduct an overnight Variable Rate Repo (VRR) auction under the Liquidity Adjustment Facility (LAF) today, after reviewing current and evolving liquidity conditions.

According to the RBI, the auction will be for a notified amount of Rs 75,000 crore with a one-day tenor. The bidding window will be open from 9:30 AM to 10:00 AM, and the transaction will be reversed on December 24.

The overnight VRR auction is a routine liquidity management tool used by the RBI to absorb or inject short-term liquidity in the banking system and ensure overnight interest rates remain within the policy corridor.

Rupee, Dollar

The Indian rupee weakened against the US dollar in early trade today. As of the time of writing, rupee traded at 89.69 against its previous close of 89.56. Over the past year, the rupee has depreciated about 5.60 per cent against the greenback.

Meanwhile, the US dollar index, which measures the greenback against a basket of world’s six major currencies, slipped to 97.72 in early trade, down 0.23 per cent from its previous close of 97.95. The greenback has weakened about 8.9 per cent over the past year amid softer inflation data and expectations of US Fed rate cuts.

Crude Oil Prices

Crude oil prices slipped in early trade today after surging more than 2 per cent in the previous day. Benchmark futures contracts rose more than 2 per cent after US-Venezuela oil tensions escalated. The development revived fears of supply disruptions.

As of the time of writing, Brent crude oil futures traded down by 0.16 per cent at $61.97 per barrel, and the West Texas Intermediate (WTI) crude oil futures was down by 0.26 per cent at $57.86 per barrel.

Gold and Silver Prices Today

Gold and silver prices touched new record highs on the Multi Commodity Exchange (MCX) in early trade today.

Gold futures jumped as much as 1.20 per cent to its fresh all-time high of Rs 1,38,381 per 10 grams. Silver futures jumped up to 1.75 per cent to touch a new lifetime high of Rs 2,16,596 per kg.

The bullions extended their rally on account of increased bets on further rate cuts by the US Federal Reserve, heightened US-Venezuela oil tensions and the killing of a Russian army general. These developments have intensified geopolitical risks, prompting investors to seek safe-haven assets like gold and silver.

US Stock Market

Benchmark indices on Wall Street closed higher overnight, led by a continued rebound in technology stocks. The rally in tech stocks, which began late last week, was supported by strong earnings forecasts from Micron Technology and a softer-than-expected US inflation report.

The Dow Jones rose 227.79 points, or 0.47 per cent, to close at 48,362.68, while the S&P 500 gained 43.99 points, or 0.64 per cent, to end at 6,878.49. The tech-heavy Nasdaq Composite added 121.21 points, or 0.52 per cent, to close at 23,428.83.

Asian Stock Markets

Asian equity indices largely opened higher in early trade today, tracking cues from Wall Street's overnight gains.

China's CSI 300 was up around 0.36 per cent and South Korea's Kospi traded higher by 0.42 per cent. On the other hand, Japan's Nikkei 225 traded 0.25 per cent lower, and the Hong Kong-based Hang Seng traded around flat levels.