Summary of this article
Moderating India IIP data (13-month low) is countered by a narrowing Current Account Deficit
Contracting US Manufacturing PMI signals reduced business confidence, adversely impacting Indian export-oriented companies
Increasing US Fed interest rate cut expectations and fluctuations in crude oil and gold prices remain central factors.
Market Cues For Today: Sensex and Nifty are likely to open flat on December 2. The Gift Nifty opened marginally higher at 26,364 levels. At the time of writing, the index dipped by 29 points or 0.11 per cent at 26,317 levels. Several macroeconomic factors and commodity price fluctuations are likely to impact investor sentiment and influence trade today.
Stock Market Cues For Today
D-street is likely to factor in several cues on December 2 such as domestic macroeconomic cues like India’s IIP data and global macroeconomic cues like the release of US Manufacturing PMI. On the other hand changes in gold and crude oil prices are also likely to affect trading activity. Interest rate expectations are also set to affect trade today.
Potential Interest Rate Cuts
Investor sentiment is likely to be framed by the increasing expectations of potential interest rate cuts by the US Federal Reserve. Closer home, investors are also tracking the upcoming Reserve Bank of India policy decision.
India IIP Data Release
India’s industrial production (IIP) data was released on December 1. Industrial growth moderated to a 0.4 per cent in October. Notably, this is a 13 month low, indicating deceleration in recovery in the industrial sector. The moderation of growth is expected to dampen the bullish sentiment which recently drove the market to record highs.
US Manufacturing PMI Contraction
US Manufacturing declined for the ninth continuous month. The Institute for Supply Management’s manufacturing PMI declined to 48.2 in November from 48.7 in October. Contraction in the US Manufacturing PMI indicates reduced industrial activity and lower business confidence. This development is likely to adversely impact Indian companies which rely heavily on the US market for revenue, especially those in IT services and export-oriented manufacturing.
Narrowing Current Account Deficit
In the September quarter, the current account deficit (CAD) declined by 1.3 per cent to $12.3 billion. A narrowing Current Account Deficit (CAD) is typically seen as a sign of improving external sector stability, which boosts overall investor confidence.
Crude Oil Prices
On December 1, the price of West Texas Intermediate was around $59.39 up by $0.05 or 0.38 per cent on the other hand the price of Brent Crude was around $63.19 up by $0.02 or 0.03 per cent.
Gold Rate On December 2
Physical gold prices inched higher on December 2, the price of 24 karat gold remained around Rs 13,049 per gram, the price of 22 karat gold was around Rs 11,961 per gram and the price of 18 karat remained around Rs 9,787 per gram.
Asian Indices Trade In Green
On December 2, most Asian indices traded in the green territory. The Nikkei 225, Hang Seng and KOSPI traded higher by 0.33 per cent, 0.08 per cent and 1.47 per cent respectively. On the other hand the Shanghai Composite traded lower by 0.55 per cent.
US Markets
US market indices finished the session in red on December 1 as the Nasdaq Composite, Dow Jones Industrial Average and S&P 500 closed lower by 0.38 per cent, 0.53 per cent and 0.9 per cent respectively.
