Nifty Below 23,350 in Gift Trade: What’s Driving Today’s Market Weakness

Mumbai, June 4:Indian shares declined at pre-open signalling a lower start for benchmark indices as investors remain cautious over Middle East despite a ceasefire agreement between Israel and Lebanon easing oil prices. To be sure, oil prices remain elevated despite a pullback.

Nifty 50 traded 0.6% lower at pre-open while the Sensex declined 0.4% even as Gift Nifty futures traded at 23,342.50 which is below Nifty 50’s previous close of 23,405.6. To be sure, both Nifty and Sensex have declined in five of the past six sessions amid foreign outflows and escalating oil prices. Yesterday, both benchmarks managed to pare losses and end lower as banking stocks came to their rescue.

Also, spotlight will be falling on Bharat Heavy Electricals Ltd (BHEL) and Aurobindo Pharma. BHEL secured an international order worth Rs 2,000-2,500 crore from Dangote Petroleum Refinery & Petrochemicals Free Zone Enterprise in Nigeria. Aurobindo Pharma inaugurated a large-scale dedicated biologics contract manufacturing facility, strengthening its presence in the fast-growing biologics and contract development and manufacturing (CDMO) segment.

Investors will also turn their focus to the Reserve Bank of India’s policy decision on Friday, with the central bank widely expected to leave the benchmark repo rate unchanged.

As for global cues, Asian equities fell sharply on Thursday as investors stayed on the sidelines despite a retreat in oil prices and a ceasefire agreement between Israel and Lebanon, with lingering concerns over the broader Middle East conflict keeping risk appetite in check.

South Korea’s Kospi dropped 1.4%, while Taiwan’s Taiex fell 1.14%. Hong Kong’s Hang Seng declined 1.3%, and Japan’s Nikkei slid nearly 2%. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 1.4%, reflecting widespread weakness across regional markets.

Overnight, U.S. stocks closed lower as investors booked profits following a strong rally that had pushed major benchmarks to record levels.

The Dow Jones Industrial Average fell more than 1%, while the S&P 500 and Nasdaq also ended in the red. Financial and technology stocks led the decline as higher oil prices during much of the session and geopolitical uncertainty weighed on sentiment.

However, gains in select semiconductor stocks helped cushion losses, with enthusiasm around artificial intelligence continuing to underpin parts of the technology sector.

European markets also ended lower, mirroring the cautious sentiment seen elsewhere. The pan-European STOXX 600 index slipped as investors assessed the implications of elevated energy prices and ongoing geopolitical risks.

Banking and financial stocks were among the worst performers. Retail shares, however, provided some support after Zara-owner Inditex reported stronger-than-expected sales, signalling resilient consumer demand despite an uncertain macroeconomic backdrop.

Source:

• Exchanges