Market Commentary - Pre-Session
03-Feb-2025 08:20
Shares may slump at opening bell on weak global signals
GIFT Nifty:
The Nifty 50 is projected to open on a weak note, following a 174-point decline in the GIFT Nifty February 2025 futures contract.
Global cues were weak after President Donald Trump imposed trade tariffs on Canada, Mexico, and China over the weekend, marking the start of a new global trade war.
Institutional Flows:
Foreign portfolio investors (FPIs) sold shares worth Rs -1,327.09 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 824.38 crore in the Indian equity market on 1 February 2025, provisional data showed.
According to NSDL data, FPIs have sold shares worth Rs 81903.72 crore in the secondary market during January 2025.
Global Markets:
The US Dow Jones index futures were currently down by 603 points, signaling a weak opening for US stocks on the next trading day.
Asian stocks slumped on Monday and US equity futures pointed sharply lower after US President Donald Trump's tariffs on Canada, Mexico and China triggered fears of a broad trade war and hit to global growth.
Meanwhile, China's Caixin manufacturing PMI grew 50.1 in January, below prior month's reading of 50.5.
The Trump administration announced new tariffs on imports from Mexico, Canada, and China, starting Saturday. These tariffs are partly in response to illegal fentanyl distribution. Potential tariffs include 25% on Mexican and Canadian imports, 10% on Chinese goods, and future tariffs on chips, oil, gas (possibly by February 18th), steel, aluminum, and copper. Trump insists these tariffs are unavoidable and will generate substantial revenue, even hinting at possible European tariffs. He contrasted the US's historical reliance on tariffs with its current dependence on income tax. All three countries decried the tariffs and vowed retaliation.
The news caused US stock market declines on Friday. At the close in NYSE, the Dow Jones Industrial Average fell 0.75%, while the S&P 500 index declined 0.5%, and the NASDAQ Composite index declined 0.28%.
Apple shares closed lower as the broader market selloff erased earlier gains. The company expects sales growth in the low- to mid-single digits for its fiscal second quarter, easing concerns about flagship handset sales, which slightly missed estimates in the holiday season. CEO Tim Cook remains optimistic, citing Apple Intelligence (AI features) as a driver of future sales.
Exxon Mobil stock fell 2.5%, despite exceeding fourth-quarter profit expectations. Higher oil and gas production helped offset lower crude prices and weaker refining margins.
Domestic Market:
The key equity indices remained volatile on Budget Day, ending near the flat line despite key announcements by Finance Minister Nirmala Sitharaman in the Union Budget 2025-26. The Nifty 50 settled below the 23,500 mark, after touching an intraday high of 23,632.45 in mid-morning trade. Tax relief boosted consumption stocks (realty, autos, FMCG, consumer durables), but the market's overall reaction to the budget was largely muted.
The S&P BSE Sensex added 5.39 points or 0.01% to 77,505.96. The Nifty 50 index lost 26.25 points or 0.11% to 23,482.15.
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