Thursday promises to be an action-packed trading session with multiple catalysts converging simultaneously. According to reports from CNBC TV18, the focus is expected to shift away from Nifty 50 towards specific stocks due to extensive news-flow including the biggest FDI transaction, IPO launches, earnings announcements, and the weekly expiry of Sensex contracts. The market is currently struggling with no follow-up buying - one day hopes rise high, the next day they fizzle out, as witnessed in Wednesday's session after Tuesday's strong upmove. Notably, the Nifty broke below key support levels during Wednesday's session, with the index falling even below the 22,600 mark before managing to close above that level.
GIFT Nifty staged a sharp recovery on Thursday morning, trading around 22,690, up 68 points or 0.3 percent, indicating a positive start for Indian benchmark indices despite global market volatility. The index has rebounded about 165 points from Wednesday evening's low of 22,525, signaling resilience in domestic markets. This recovery comes after Indian equities ended lower on Wednesday with the Sensex falling 251.89 points to 72,781.89 and the Nifty declining 99.25 points to 22,622.70. Foreign institutional investors sold equities worth around ₹1,857 crore, while domestic institutions bought shares worth ₹2,670 crore, highlighting the continued institutional divergence in market sentiment.
US consumer price inflation rose to 3.7 percent year-on-year in September, up from 3.4 percent in August and above market expectations of 3.6 percent, reinforcing concerns over tighter global monetary conditions and creating a sentimental negative for risk assets such as emerging market equities. As per Reuters, the inflation figures unsettled global markets by raising concerns that higher US interest rates could increase borrowing costs and weigh on companies with substantial artificial intelligence-related spending. US technology stocks tumbled overnight, with Oracle, CoreWeave and other companies exposed to AI infrastructure investment coming under pressure as investors reassessed the cost of financing their expansion plans. Higher US rates make emerging markets such as India less attractive for overseas investors, who have already sold Indian stocks for 14 straight sessions into Wednesday, taking year-to-date outflows to a record $32.7 billion.
Asian equities fell sharply on Thursday, with the MSCI Asia Pacific Index plunging 2.7 percent, heading towards its lowest level since July. South Korea's Kospi led regional losses, crashing 7.6 percent as semiconductor majors Samsung Electronics and SK Hynix both fell more than 9 percent. Japan's Nikkei 225 futures declined 4.8 percent, while Hong Kong's Hang Seng slipped 0.9 percent and the Shanghai Composite lost 1.2 percent. The MSCI emerging Asia equities index, heavily weighted towards South Korean and Taiwanese stocks, dropped 3.8% to its lowest level since late July. US equity futures also remained under pressure, with Nasdaq 100 futures down 0.9 percent and S&P 500 futures falling 0.3 percent. The selloff was particularly severe in technology stocks, with the Nasdaq Composite plunging 1.88 percent to 26,692.87, its biggest daily fall since July 23, as expectations of further interest-rate increases weighed on valuations of growth and technology stocks.
Emerging Asian currencies weakened as hotter-than-expected US inflation revived Federal Reserve rate hike concerns, boosting the dollar and triggering a sell-off in AI-linked stocks. Most emerging Asian currencies weakened on Thursday as hotter-than-expected US inflation data heightened expectations of another Federal Reserve interest rate hike. MSCI's broad emerging-market currency index fell 0.3% in Asian trading, recovering slightly after an earlier decline of 0.4%. The South Korean won weakened more than 1% to 1,352.84 per dollar, its lowest level in two weeks, while the Taiwan dollar fell to 32.325 per dollar, its weakest level since early August. Heavy selling in semiconductor stocks in both markets added to pressure on their currencies. In Southeast Asia, the Philippine peso weakened to a record low of 63.09 per dollar, while the Indonesian rupiah fell as far as 17,957 per dollar before recovering some losses.
The Nifty has found crucial support at 22,550 level on Wednesday, which will be the most important level to watch on the downside going into the Sensex expiry session. On the upside, the 22,750-22,800 zone could present some supply but a move above those levels can open the door towards the 23,000 mark. Rupak De of LKP Securities noted that the index faced resistance at the 200SMA on the 30-minute chart and witnessed a sharp decline, with the RSI on the 30-minute chart continuing to remain in a bearish crossover. The daily RSI has formed a hidden negative divergence, indicating underlying weakness, though the recent recovery has been encouraging largely driven by banking and IT sectors. On the downside, immediate support is seen at 22,500, below which selling pressure could intensify.
