Opening Bell - Daily Morning Commentary

Trump's Tariff Move Rattles Global Markets

US Stocks tumbled on Friday afternoon after the White House’s confirmation of tariffs against Canada, Mexico and China would take effect on Saturday. It caught markets off guard as most had been hoping that Trump wouldn't follow through on his earlier threat to impose tariffs on Feb. 1

U.S. Commerce Department data showed that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% last month, the largest increase since last April, amid a surge in consumer spending, suggesting the Federal Reserve would probably be in no hurry to resume cutting interest rates.

The January nonfarm payrolls report due next week will signal whether the labor market remains buoyant despite high borrowing costs.

Investors have been bracing for further tariff news after Trump has repeatedly warned about using the measure. Uncertainty over the impact of tariffs has muddled the outlook for the economy and inflation.

European markets traded higher overnight following lower-t*an-expected inflation readings in Germany and France.

Pre-Budget optimism fuels markets

Ahead of the Parliament’s Budget session, Prime Minister Narendra Modi invoked goddess Lakshmi during his customary address with a specific mention of the middle class and poor. It fuelled widespread anticipation across India's middle class and corporate sectors as Finance Minister Nirmala Sitharaman prepares to present her eighth consecutive Union Budget. Expectations are high that she will announce changes to income tax slabs, introduce incentives for the new tax regime, and provide home loan exemptions.

Indian markets rallied for the fourth consecutive session on January 31, with the benchmark indexes gaining over a percent amid pre-Budget optimism. If the union budget falls short on measures aimed at stimulating investment and economic growth, markets will not take that kindly.

Market showed significant strength as the Nifty breached key resistance levels, surpassing both its 20-day exponential moving average and the previous swing high of 23,327 and 23,426 respectively. Heading into today’s special budget session, the index faces crucial resistance at the 50-day and 200-day exponential moving averages of 23,681 and 23,622.

A decisive break above 23,681 could propel the Nifty toward 24,000, while 23,426 and 23,327 should provide support in the near term.

Opening Bell - Daily Morning Commentary

Market Mosaic - US Economy, Tech Earnings, and Shot Build-up before the Budget.

Dalal Street braces for action-packed session with multiple market-moving events in focus this week.

U.S. equity markets advanced Thursday, buoyed by robust fourth-quarter GDP data and mixed corporate earnings. The economy grew at a 2.3% annualized rate in the fourth quarter, moderating from 3.1% in the previous quarter. Notably, personal consumption expenditures reached their highest level in seven quarters, underscoring resilient household spending.

Tech giants Meta and Microsoft both surpassed analysts' earnings and revenue expectations. While Meta shares climbed, Microsoft stock declined roughly 6% after issuing softer-than-expected revenue guidance for the current quarter. Positive commentary from Tesla helped counterbalance Microsoft's cautious outlook.

Former President Trump is expected to announce by day's end whether to impose a 25% tariff on Mexican and Canadian oil imports, potentially taking effect February 1. Market participants remain cautious, as uncertainty surrounding these tariff and fiscal policies makes it challenging to establish sustainable investment strategies.

In Asian markets, the yen is poised to deliver its strongest January performance since 2018, bolstered by expectations that the Bank of Japan (BOJ) will continue its rate-hiking trajectory while other major central banks pivot toward monetary easing. We have featured these trends in detail in our "Chart of the Day" section in our Daily Report – do have a look.

Public sector stocks dominated trading yesterday, with the Nifty PSE index surging nearly 2% as investors positioned themselves ahead of the Union Budget. Markets anticipate increased allocations to public sector undertakings as the government seeks to propel economic growth.

In derivatives trading, foreign institutional investors hold substantial short positions, with nearly 89% of their Index Futures positions on the bearish side. After four consecutive declining series in the Nifty, historical patterns suggest a potential rebound in February, driven by short covering from foreign investors. Two crucial events – the Union Budget and the Reserve Bank of India's interest rate decision on February 7 – will likely determine the market's direction.

The Nifty has gained over 500 points in the past three sessions from its recent swing low of 22,786, buoyed by short covering and optimism surrounding growth-oriented policies expected in the Union Budget. The index now faces immediate resistance at the previous swing high of 23,426, while finding support in the 23,050-23,100 range.

Indian markets are likely to open mildly higher in line with positive global cues.

Opening Bell - Morning Commentary

Brace for volatility

The Federal Open Market Committee (FOMC) maintained its target range for the federal funds rate at 4.25%-4.5%. The Fed also made no change to its balance-sheet-reduction program, known as quantitative tightening (QT). Fed Chair Powell took a measured stance in his post-meeting press conference, acknowledging progress in inflation cooling while reiterating that the central bank remains data-dependent. Jerome Powell's comments did little to alter investor expectations for rate cuts later in the year.

Recent earnings announcements from three of the market-leading Magnificent 7 stocks received a lukewarm response from investors. Microsoft shares declined more than 3% in after-hours trading, while Tesla experienced initial losses before recovering. Meta saw a modest decline of one percent.

Apple is set to release its earnings report later today, that is keeping tech investors on the edge of their seats.

Asian markets are trading mostly higher, with some markets still closed for the Lunar New Year holiday.

Back home, Nifty rose for the second consecutive day with a gain of 205 points or 0.90%, to close at 23163 on 29th January. After three days of consecutive fall, the smaller stocks registered a sharp pullback of 3.32%, the highest one-day rise in percentage terms since 5th June 2024.

Our market is expected to experience significant volatility today. Following recent regulatory changes to expiration dates, derivative contracts for all five indices will expire simultaneously today. Substantial outstanding short positions in all these indexes is likely to create turbulent trading conditions. Adding to the market dynamics, 21 stocks available for derivative trading will release their quarterly results today, further amplifying potential price swings.

Nifty has closed above its 10 DMA for the first time since 3rd Jan 2025. FPIS and local traders are covering their shorts before the union budget on Saturday. Support has shifted up at 23000, while immediate resistances for the Nifty are seen at 23347 and 23426.

Indian markets are likely to open mildly lower in line with global cues.

Opening Bell - Daily Morning Commentary

Markets recover from Deepseek Selloff

US Equity markets finished higher on Tuesday, as technology stocks rebounded from sell-off that was sparked by Chinese AI startup DeepSeek, a low-cost Chinese artificial intelligence model that could threaten the dominance of U.S. rivals. Some investors hunted for bargains after record-breaking wipeout.

The Federal Open Market Committee (FOMC) will conclude its January meeting on Wednesday, with markets forecasting Fed to slow its pace of easing, starting with a pause this month.

Microsoft and Meta are scheduled to report fourth-quarter earnings on Wednesday, with Apple and cloud-computing leader Amazon 0on deck for Thursday. Investors will be looking for perspective from management on the potential impact of DeepSeek's AI model on their businesses.

Some Asian markets are closed or have shortened trading sessions due to the Lunar New Year holiday. The U.S. dollar advanced versus major currencies. In the commodity space, WTI oil and gold traded higher.

India's benchmark Nifty index staged a welcome recovery on January 28th, rising 128 points (0.56%) to close at 22,957, primarily driven by a strong performance in banking stocks. This upward movement provided much-needed relief to investors following two consecutive sessions of market decline.

Market sentiment is currently focused on three crucial upcoming events that could significantly influence the market direction in the near term: First, all eyes are on the US Federal Reserve's monetary policy meeting conclusion tonight, which could provide important signals about the central bank's interest rate trajectory for 2025. Second, the monthly futures and options (F&O) expiry scheduled for Thursday is expected to introduce some volatility as traders adjust their positions. These expiry sessions typically witness increased trading activity and can lead to sharp market movements. Third, and perhaps most significantly for domestic investors, the presentation of India's Union Budget 2025 on Saturday is generating considerable anticipation. The convergence of these three major events within the same week has created a heightened sense of caution among investors, who are carefully positioning their portfolios in anticipation of potential market-moving developments.

Indian markets are slated to open mildly higher today, on the back of positive global cues.

Opening Bell - Morning Commentary

Relief Rally at the opening

DeepSeek's introduction of a free, open-source AI model has rattled the technology sector, with the Chinese company claiming capabilities comparable to ChatGPT at substantially lower development costs. The announcement triggered a massive selloff in technology stocks, particularly affecting industry leader Nvidia, which suffered an unprecedented $593 billion single-day market value loss - the largest ever recorded on Wall Street.

Indian markets are expected to show resilience at opening, having already factored in the significant declines in U.S. markets. The recovery in the Dow Jones from its initial plunge, coupled with the Reserve Bank of India's recent liquidity measures, has fostered optimism about potential rate cuts next week.

The RBI has implemented comprehensive liquidity enhancement measures, including a planned Rs 60,000 crore Open Market Operation purchase to be executed in three phases, alongside a Variable Rate Repo auction scheduled for next month. These initiatives signal the central bank's commitment to maintaining adequate liquidity, with additional measures anticipated during next week's Monetary Policy Committee meeting.

Market participants remain cautious amid the technological upheaval in artificial intelligence space, upcoming monetary policy decisions from both the RBI and Federal Reserve, and their policy guidance. This apprehension is compounded by inconsistent corporate earnings reports and uncertainty surrounding the upcoming Union Budget.

Nifty has fallen below the critical support threshold of 22,976, which now serves as resistance. Support lies between 22670 and 22800.

Opening Bell - Morning Commentary

Trump slaps 25% tariffs on Colombia – Rattles global markets.

Trump’s abrupt tariff announcement rattled global markets as he ordered his administration to impose tariffs and sanctions on Colombia hours after its president refused to allow two military planes carrying deported migrants to land, punishing a US security partner for stepping even partially out of line with his immigration goals.

Investors were lulled into a false sense of security when he refrained last week from immediately imposing tariffs on major trading partners, including China.

Scrutiny of U.S. tech is intensifying as ripples from a Chinese AI startup called DeepSeek spread. DeepSeek recently launched a free, open-source AI model that claims to be at least equal to more established models like ChatGPT on many levels but built at a fraction of the cost.

Indian markets are under pressure as concerns about slowing earnings growth and foreign fund outflows overshadowed President Trump's calls for lower oil prices and immediate Federal Reserve interest rate cuts. Benchmark indices declined for the third consecutive week, dropping approximately 0.5%.

An official survey showed on Monday that China's January non-manufacturing activity grew slower than in December, suggesting policymakers need to introduce even more stimulus measures to prop up depressed domestic demand.

Market data suggest maintaining a cautious stance. A decisive break below 23000 could trigger further long unwinding, potentially pushing the Nifty toward 22,700-22,800 levels, followed by 22500 levels. Any close below 23000 or above 23500 would extenuate the trend in that direction.

Opening Bell - Daily Morning Commentary

First signs of semblance

American stock market rally saw further gains Thursday. The S&P 500 finished the day up 0.5%, surpassing its previous record finish of 6090.

President Donald Trump, speaking remotely at the World Economic Forum in Davos, reiterated plans for tax cuts and tariff hikes.

U.S. crude oil prices fell 1.1% to $74.62 per barrel, following Trump's push for more OPEC output. Crude futures have tumbled 6.8% in the last five sessions

On the economic front, initial jobless claims ticked higher from the prior week, partly impacted by the wildfires in the Los Angeles area. Overall claims remain low, buttressing the fact that the U.S. economic and earnings growth momentum remains strong.

Stocks in the Asia-Pacific region advanced on Friday, tracking an overnight rally on Wall Street that pushed stocks to record highs. All eyes will be on the Bank of Japan, which is widely expected to raise interest rates today.

Indian markets extended their gains to day two on Thursday, led by UltraTech Cement Ltd. and information-technology stocks on positive earnings and optimism over Donald Trump's AI policies. After the last few days of underperformance, the mid and small-cap indices made a strong comeback in yesterday's session. Value buying was seen in beaten-down midcap stocks, where recent quarterly results are per market expectations, especially in the Information technology and consumer durable sectors.

The Nifty's daily oscillators have shown a slight positive divergence, indicating a good chance that the current pullback will extend today. Derivative market cues suggest minor short covering by Foreigners. A level of 22976 appears to have established itself as a strong support for Nifty in the short term, while the range of 23400-23500 could pose as resistance.

Indian markets to open mildly higher on the back of positive Asian and buoyant American markets.

Opening Bell - Daily Morning Commentary

S&P 500 hits fresh highs

Wall Street's indexes rose on Wednesday, with the benchmark S&P 500 hitting an intraday record high. Investors cheered streaming video provider Netflix's quarterly report and President Donald Trump's private-sector artificial intelligence infrastructure investment plan.

US President Donald Trump announced a groundbreaking joint venture, Stargate, with OpenAI, Oracle, and Softbank. The venture will commit up to $500 billion over four years to advance AI infrastructure in the US. Key partners like Microsoft, Nvidia, and Arm are expected to join the initiative, with initial operations beginning in Texas. Shares of Oracle were higher by roughly 7% in response, and technology was the top-performing sector of the S&P 500 by a wide margin.

The German DAX index resumed its record-breaking rally and surged to fresh all-time highs on the possible loosening of the debt brake, the hope of ECB rate cuts, and China stimulus.

The Bank of Japan is expected to raise its policy rate by 25 bps to 0.50% today.

U.S. President Donald Trump on Wednesday threatened Russia "and other participating countries" with taxes, tariffs, and sanctions if a deal to end the war in Ukraine is not struck soon.

Asian markets opened on a positive note following gains in Western markets.

Nifty saw a pullback of 136 points in a volatile session that eventually ended in the green, led by gains in heavyweight sectors such as Information Technology (IT) and banking. Nifty managed to protect lows of 22976, which will serve as the stop loss for long positions. On the higher side, 23300-23400 could offer resistance. Sharp selling continued in broader markets, and breadth deteriorated further. Foreign investors also sold equities worth 4,000 Cr. in yesterday’s markets.

Indian markets are likely to open subdued today despite positive global cues as foreign investors continue to offload Indian stocks incessantly.