FX.co ★ Sensex, Nifty Seen Flat To Higher At Open

Indian stocks are expected to see a modest uptick on Wednesday, buoyed by generally favorable signals from other Asian markets. However, volatility remains a possibility, and additional selling pressure may emerge in the mid-cap and small-cap sectors. This is due to concerns surrounding foreign institutional investor (FII) selling, as U.S. Treasury yields have reached three-month highs, sparking apprehensions about an increasing U.S. fiscal deficit.

In other developments, the International Monetary Fund (IMF) has upheld its global growth forecast at 3.2 percent for both 2024 and 2025. Additionally, the IMF has maintained India's growth forecast at 7 percent for FY25 and 6.5 percent for FY26, as detailed in the latest World Economic Outlook update.

On Tuesday, the benchmark indices—Sensex and Nifty—both declined by approximately 1.2 percent, primarily due to significant selling activity by foreign institutional investors. Notably, these investors have offloaded over Rs. 80,000 crore in shares this month, marking one of the highest outflows in four years.

The Indian rupee closed at a historic low of 84.0775 against the U.S. dollar, affected by capital outflows prompted by Hyundai repatriating funds to its South Korean headquarters following its recent IPO.

Asian markets experienced fluctuations this morning, with U.S. Treasury 10-year yields lingering near 4.2 percent after surpassing this level for the first time since July. Meanwhile, the U.S. dollar remains near its highest point in two and a half months, as Federal Reserve officials adopted a cautious stance on the pace of future interest rate cuts. Additionally, gold prices decreased after previously reaching a new high.

In Asian trading, oil prices dipped as industry data suggested an increase in U.S. oil inventories, and the Biden administration renewed efforts to achieve a ceasefire in the Middle East.

U.S. equities concluded the previous session with mixed results. Treasury yields continued to rise amidst expectations for a more gradual pace of Federal Reserve rate reductions and concerns regarding the fiscal implications of the U.S. presidential election outcome. The Dow Jones and the S&P 500 posted slight losses, while the technology-heavy Nasdaq Composite saw a modest gain of 0.2 percent.

In Europe, markets closed lower on Tuesday, weighed down by worries about the U.S. fiscal deficit and Fed commentary indicating gradual rate reductions. The pan-European STOXX 600 and Germany's DAX both dipped by 0.2 percent, France's CAC 40 remained largely unchanged, and the U.K.'s FTSE 100 eased by 0.1 percent.