Indian Stock Market: Key Overnight Developments Impacting the Market

The Indian stock market is anticipated to open flat on Friday as investors await the Reserve Bank of India’s (RBI) crucial monetary policy decision. The benchmark indices, Sensex and Nifty 50, are expected to experience minimal movement amid mixed global market cues and significant economic announcements.

Asian Markets

Asian markets displayed varied performances on Friday, influenced by mixed cues from Wall Street and upcoming key economic data from China and Japan. Japan’s Nikkei 225 and Topix indices remained flat, whereas South Korea’s Kospi rose by 1.45% and the Kosdaq increased by 0.6%. Hong Kong’s Hang Seng index futures indicated a stronger opening.

Wall Street

On Thursday, the US stock market closed with mixed results, largely due to declines in technology and utility stocks. The Dow Jones Industrial Average gained 78.84 points (0.20%) to close at 38,886.17, while the S&P 500 dipped slightly by 1.07 points (0.02%) to 5,352.96. The Nasdaq Composite fell 14.78 points (0.09%) to end at 17,173.12. Notably, Nvidia shares dropped by 1.1%, GameStop surged by 47%, Lululemon Athletica climbed 4.8%, and Five Below plummeted by 10.6%.

Focus on RBI’s Monetary Policy

Investors are closely watching the RBI’s Monetary Policy Committee (MPC) meeting, led by Governor Shaktikanta Das. Expectations are high for the committee to keep the repo rate unchanged at 6.5% for the eighth consecutive time while maintaining a ‘withdrawal of accommodation’ stance. Analysts suggest that the RBI Governor’s commentary on inflation and potential future interest rate cuts will be pivotal for market movements.

Previous Day’s Market Performance

On Thursday, the Sensex surged by 692.27 points (0.93%) to close at 75,074.51, and the Nifty 50 advanced by 201.05 points (0.89%) to settle at 22,821.40. This upward movement was driven by optimism surrounding political stability and policy continuity following the Lok Sabha election 2024 results.

Prashanth Tapse, Senior VP (Research) at Mehta Equities Ltd., commented, “With buoyancy returning to the market, the volatility index eased considerably, falling by 11%. All eyes are now on the upcoming Union Budget and the RBI’s commentary on interest rates in its credit policy.”

European Central Bank

The European Central Bank (ECB) executed its first interest rate cut since 2019, lowering the key deposit rate by 25 basis points to 3.75% from a record-high of 4.0%. This move reflects progress in tackling inflation, although ECB President Christine Lagarde emphasized that the battle against inflation is ongoing.

US Jobless Claims

The US Labor Department reported an increase in unemployment claims, with initial claims rising by 8,000 to a seasonally adjusted 229,000 for the week ending June 1. This exceeded economists’ expectations of 220,000 claims, indicating some softening in the labor market.

Japanese Consumer Spending

Japanese household spending grew for the first time in 14 months, with a year-on-year increase of 0.5% in April, slightly below the expected 0.6% rise. However, on a seasonally adjusted month-on-month basis, spending fell by 1.2%, against an anticipated rise of 0.2%.

Oil Prices

Crude oil prices edged higher, with Brent crude surpassing $80 per barrel. Brent crude oil rose by 0.26% to $80.08 per barrel, while US West Texas Intermediate (WTI) futures increased by 0.25% to $75.74 per barrel.

Market Outlook

As the Indian stock market opens today, investors will keenly observe the RBI’s monetary policy announcements and global market trends. The mixed signals from Asian and US markets, alongside domestic economic policies, will play a significant role in determining the market trajectory.

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