Reaction to US Fed Rate Cut and Indian Stock Market Mixed Performance

SMC Global’s weekly market insight tells you what happened last week in the Indian market and at the global level as well. The global stock market felt the heat of war news, with the rise in the UK’s inflation levels. Indian stock market faced the brunt of an infamous bribery case and the selling of FPIs. In this blog, we’ll know in detail what happened last week (November 18, 2024 to November 22, 2024) all across the globe.

Global Stock Markets Remained Volatile

In the week gone by, Global stock markets experienced significant volatility amid reports that Ukraine fired a U.S.-made long-range missile into Russia for the first time and President Vladimir Putin approved changes to Moscow’s nuclear doctrine. Investors are closely watching commentary from U.S. Federal Reserve officials ahead of the mid-December FOMC meeting, with money-market expectations favoring a 25-basis-point rate cut, according to CME Group’s FedWatch.

Also read: US Fed Rate Cut of 25 bps: Impact on Indian Stock Market

Crude Oil Price and Tariff Risk

Geopolitical tensions between Ukraine and Russia continue to impact crude oil prices, while Europe remains anxious over potential U.S. trade tariffs. The European Central Bank’s Vice President Luis de Guindos and Bundesbank President Joachim Nagel expressed concerns about the economic risks these tariffs could pose to the eurozone, highlighting that slowing economic growth-not inflation-is now the primary issue. Meanwhile, President-elect Donald Trump’s proposed trade policies are raising fears of renewed trade conflicts. His previous protectionist stance caused significant tension with China, and similar measures could now target Europe.

UK Inflation Jumped

In the UK, annual CPI inflation rose to 2.3% in October from 1.7% in September, while PPI fell 2.3% year-on-year although it increased slightly by 0.1% month-on-month. In anticipation, China announced new policies to support its export sector against “unreasonable foreign trade restrictions.” Trump’s threat to raise tariffs by 60% on Chinese goods could severely hurt export profitability. On the economic data front, China’s economy showed signs of improvement in October. Consumption, investment, exports, and market sentiment all strengthened, with the service production index achieving its fastest growth this year.

Manufacturing PMI Improved

Real estate production grew for the first time since June 2023, retail sales rose 4.8% year-on-year, and goods exports surged 11.2% year-on-year, the highest rate since May 2023. The manufacturing PMI returned to expansion at 50.1 after five months of contraction, while lending rates remained unchanged following a 25-basis-point cut in October. In Japan, factory activity contracted for the fifth consecutive month, with the au Jibun Bank manufacturing PMI falling to 49.0 in November. However, the services PMI rebounded to 50.2, signaling a slight expansion after a contraction in October.

Indian Stock Market Performance

Back at home, the Indian stock market witnessed mixed performance recently, grappling with challenges arising from global and domestic headwinds. A significant blow to investor sentiment came from bribery allegations against Gautam Adani, which amplified market fragility already strained by unfavorable macroeconomic conditions.

Also read: Adani Group Market Cap Declined by ₹2 Lakh Crore After US Allegations

Continuous selling by foreign portfolio investors (FPIs) and a slowdown in economic activity further intensified market pressures. Meanwhile, inflationary concerns and subdued earnings reports from India Inc. have added to the market’s underperformance during this period.

Sector-wise, IT and financial stocks emerged as the outperformers, supported by robust fundamentals and favorable valuation metrics. In contrast, sectors like metals, FMCG, and autos witnessed selling pressure, reflecting broader concerns about consumption and export demand. Mid-cap and small-cap stocks also faced valuation pressures, aligning with investor preference for safer large-cap names.

Conclusion

Going forward, geopolitical developments and global monetary policy decisions will remain pivotal in shaping market trends. Investors are encouraged to adopt a balanced strategy focusing on fundamentally strong sectors while avoiding overvalued segments, to navigate the prevailing uncertainties effectively.

So, open Demat account with SMC Global Securities and invest as per your investment objective and risk profile.

Reference:
SMC Global Securities’ Research Team

Author: All Content is verified by SMC Global Securities.