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Published: Jan 7, 2023
Updated: Jan 7, 2023

Global Market Trends continue to pressurize Indian Stock Markets on Friday

Indian Markets Cautious as Global Cues Rule

The Indian markets closed lower today i.e., 6 th December 2022 on the last trading day of the week, with the Sensex falling by 452.90 points (0.75%) to 59,900 and the Nifty dropping by 132.70 points (0.74%) to 17,859.50. A total of 1,392 shares advanced, 2,007 shares declined, and 128 shares remained unchanged.

The trend is largely due to global cues, including the new year allocation plans by the foreign institutional investors, pre-budget expectations of the investors and the American Markets showing a negative trend amidst expectations of more rate hikes.

Let us understand the global market insights which boosted the selling pressure in Indian Markets:

Fear of more rate hikes ahead

The US stock market experienced a significant decline due to strong private sector job data, which led to speculation of additional interest rate hikes. The data showed that 235,000 private sector jobs were added in December, exceeding expectations, and initial jobless claims were lower than expected. This caused the Dow, S&P 500, and Nasdaq to decrease by 1-1.5%.

Massive Layoffs in Major Tech Companies

Amazon fell over 2% after it announced plans to shed more than 18,000 jobs, while Microsoft extended its selloff to slide nearly 8% this year.

Gas prices cool down due to Warmer than normal conditions in Europe while oil prices show a rise , gold slips from the year high

US natural gas prices dropped by 10% to below $3.8/MMBtu, according to a federal report which revealed a smaller-than-expected decline in storage. The unusual warmth in Europe during the winter months of January also contributed to lower demand for heating, leading to a decrease in natural gas prices. Meanwhile, Brent crude oil saw a slight increase,the price of gold decreased from its previous high of INR 56,000.

Several companies have announced job cuts or restructuring, including:

Bed Bath & Beyond, whose shares plunged 24% after announcing plans to file for bankruptcy while Silver-gate Bank, which crashed by more than 42% after disclosing that customers withdrew their money during the fourth quarter.

Covid in China Disrupts Global Supply Chains and Production

The recent surge in Covid cases in China is disrupting global supply chains and adversely impacting production. Logistics managers are warning clients that, due to the spike in infections, factories are unable to complete orders. This is leading to delays in the production and delivery of goods, which can have serious consequences for businesses that rely on these supply chains. In fact, US manufacturing orders from China are already down 40% as a result of the Covid situation in China.

Overall, the negative performance of US markets and the announcements of job cuts and restructuring by several companies likely influenced the Indian markets today, leading to the Sensex and Nifty closing lower.