Indian equities are poised for a positive start on Tuesday, reflecting the upbeat sentiment from global markets. However, investors should brace for potential fluctuations during the trading session, driven by caution ahead of the Q3 earnings reports and concerns surrounding the HMP Virus outbreak.
In response to the virus scare, several state governments, including Karnataka, Gujarat, and Maharashtra, have issued advisories, assuring the public that there is no immediate threat. On Monday, major indices, Sensex and Nifty, each declined by approximately 1.6%, with widespread selling attributed to a stronger U.S. dollar and rising American bond yields, fueling fears of sustained foreign investment outflows.
The Indian rupee depreciated for the tenth consecutive trading day, closing at 85.83 per dollar, despite interventions by the Reserve Bank of India. This morning, Asian markets showed a generally positive trend, spurred by gains in technology stocks that had lifted Wall Street's main indices overnight.
The dollar index saw a slight increase in Asian trading after dropping by up to 1% during Monday's intraday session. Meanwhile, U.S. Treasury yields remained stable following Monday's rise to a year-long high on the 30-year note.
Oil prices steadied after experiencing their first decline in six trading sessions, while gold prices edged up as investors anticipated further U.S. economic data that might offer insights into the Federal Reserve's interest rate strategy.
Trade tensions resurfaced following the United States' decision to blacklist Tencent Holdings Ltd. and Contemporary Amperex Technology Co. Ltd. due to supposed connections to the Chinese military.
U.S. markets saw broad gains overnight; the dollar weakened, and yields on long-term Treasuries rose as Foxconn announced record fourth-quarter revenue. Comments from President-elect Donald Trump, dismissing reports of him reconsidering his tariff plans as "fake news," also influenced market sentiment. The Nasdaq Composite, dominated by technology stocks, advanced 1.2%, the S&P 500 rose by 0.6%, while the Dow ended slightly lower.
In Europe, stocks posted their largest gain in over a month on Monday amid speculation that the incoming Trump administration may opt for more lenient tariffs than initially anticipated. The pan-European STOXX 600 index gained 1%, with Germany's DAX rising by 1.6%, France's CAC 40 jumping by 2.2%, and the U.K.'s FTSE 100 climbing by 0.3%.
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