US markets fell across the three indices and also across market caps on Tuesday, giving a slight chill to Asian markets as well this morning.
Big Tech saw some selling on stock-specific news. A major fire at a Novelis US plant that supplies 40% of car panels saw the stocks of major US automakers correct sharply, with Form Motors falling as much as 6%.
With the government shutdown continuing for 7 days, the GDP impact starts creeping in. The estimate is that each week of the US government shutdown shaves 0.1% to 0.2% off the US GDP. Consumer finance outstandings grew less than expected in the US, adding to worries about a slowing US consumer.
The meeting of the US President and the Canadian President did not yield more than hope for an eventual trade deal in the future. The Israel-Hamas discussions on a peace deal framework continued in Egypt. The US dollar is strengthening this morning in Asian trades as the US government shutdown is leading to some safe haven demand, with US gold futures crossing $ 4000 for the first time, while Silver traded some water. Crude oil got a boost from the lower-than-expected OPEC+ supply increase in November announcements, and on the back of Russian supply disruptions due to war-related damages to key Russian oil assets.
Indian main board earnings kick off this week and will set the tone for the markets. PM Modi is in Mumbai today, inaugurating the Navi Mumbai International Airport, the Metro 3 line linking south Mumbai to central Mumbai in a $ 4 billion infrastructure boost to Mumbai connectivity.
FPIs had a rare positive day of net inflows on Tuesday, with financials, especially PSU banks, leading.
However, their positioning remains strongly net short with no relief in sight from their selling. The frenzy in the primary markets is impacting secondary market liquidity with large IPOs sucking out significant funds this month. Poor listings of mainboard IPOs may bring this frenzied fundraising to some discipline, but for now, promoters are in a rush to cash out.
The festive season cheer and the GST 2.0 consumption boom are continuing with reports of autos to two wheelers to durables getting a boost.
The next fortnight leading to Diwali will provide a glimpse of the strength of the Indian consumer and will provide some cues to the markets as well. For now, we expect softly trending upwards markets, with some relief expected as the US government shutdown becomes a reopening up and if corporate earnings start to deliver better outcomes. India VIX is low, so expectations are subdued, which is always another positive for perennial bulls like us.
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