Shares may bounce at opening bell

GIFT Nifty:

The GIFT Nifty September futures contract is up 75 points, suggesting a strong start for the Nifty 50.

Foreign portfolio investors (FPIs) sold shares worth Rs 620.95 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 2,121.53 crore in the Indian equity market on 6 September 2024, provisional data showed.

FPIs have bought shares worth over Rs 2430.53 crore in September 2024 (so far). They sold shares worth 21368.51 crore in August 2024.

The highly anticipated meeting of the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, is taking place today. The council is expected to discuss lowering the GST rate on life and health insurance premiums, currently at 18%. This potential rate reduction could lead to lower insurance costs for policyholders. In addition, the council will consider exempting foreign airlines' head offices from GST on imported services received without consideration. This measure could potentially reduce the tax burden on these foreign airlines.

 

Global Markets:

The Dow Jones index futures were up 65 points, indicating a positive opening in the US stocks today.

Asian stock markets plunged on Monday as selling pressure intensified, triggered by a weaker-than-expected US jobs report and the looming Fed meeting. Concerns about a slowdown in China and Germany further fueled the decline in stocks, which were already volatile due to anticipated Fed rate cuts.

The US non-farm payrolls increased by only 142,000 in August, falling short of the expected 165,000. This marked the lowest three-month average since mid-2020. Although the unemployment rate decreased to 4.2%, it was the first drop in five months.

In China, the consumer price index rose by 0.6% year-on-year in August, primarily due to declines in transportation, home goods prices, and rents.

Meanwhile, US markets suffered a significant setback on Friday. The S&P 500 experienced its worst week since March 2023, as investors grappled with the implications of the weak jobs report and abandoned leading technology stocks. The broad index declined by 1.73%, while the Nasdaq Composite shed 2.55%. The Dow Jones Industrial Average fell 1.01%. Megacap tech stocks took a particularly hard hit as investors dumped risk assets amidst growing concerns about the US economy's health.

Investors widely anticipate the Fed to lower interest rates by at least a quarter-percentage point at its upcoming policy meeting. However, the softening labor market trends have increased speculation that the central bank might opt for a more aggressive cut. Traders remain divided on whether the Fed will cut by a quarter- or half-percentage point.

Domestic Market:

Domestic equity market experienced a sharp decline on Friday, mirroring a broader sell-off in global markets. Investors were cautious ahead of the release of crucial US jobs data later in the day, which could significantly impact the Federal Reserve's monetary policy decisions. The Nifty 50 index closed below the 24,900 level, reversing from an earlier intraday high of 25,168.75. The sell-off was widespread, with banking and energy sectors bearing the brunt of the decline.

The barometer index, the S&P BSE Sensex, tanked 1,017.23 points or 1.24% to 81,183.93. The Nifty 50 index dropped 292.95 points or 1.17% to 24,852.15.

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