Global Economic Uncertainty Impacts Indian Markets

Global Economic Uncertainty Impacts Indian Markets
Global Economic Uncertainty Impacts Indian Markets
Global Economic Uncertainty Impacts Indian Markets
Global Economic Uncertainty Impacts Indian Markets

Global Economic Uncertainty Impacts Indian Markets

Global Economic Uncertainty Impacts Indian Markets

On Tuesday, Indian equity indices, Nifty 50 and Sensex, experienced lackluster performance, primarily influenced by weakened global cues. The rise in US Treasury yields to a multi-year high, coupled with the US dollar reaching a 10-month peak, heightened concerns about prolonged high-interest rates globally and their potential impact on the world economy.

US Treasury Yields Surge to 16-Year Peak

The US 10-year Treasury yields surged to as high as 4.566%, marking a 16-year high. Concurrently, the US dollar index recorded a 0.2% increase, reaching 106.2, its highest level since November 2022. This upward trajectory in yields and the US dollar index stems from indications by major central banks, including the US Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of England (BoE), that interest rates will remain elevated for an extended duration.

Uncertainty Surrounding US Economy

Concerns have arisen regarding the US economy, which, despite robust monetary tightening, has managed to avoid a recession in the current year. The possibility of a ‘soft landing’ for the economy could be threatened if the Fed sustains high-interest rates beyond initial expectations.

RBI’s Upcoming Monetary Policy Meeting

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) is scheduled to convene from October 4-6 to determine interest rates and policy stance. A majority of economists anticipate the RBI will maintain its pause on interest rates. The central bank’s decision will be closely watched for its potential implications on India’s economic trajectory.

Domestic Market Performance

Throughout the trading session, the domestic market remained subdued. The Nifty 50 commenced at 19,682.80, slightly higher than the previous closing figure of 19,674.55, but fluctuated within the intraday range of 19,699.35 and 19,637.45. Ultimately, the Nifty 50 concluded at 19,664.70, down by 10 points or 0.05%. The Sensex, too, experienced a decline, closing 78 points lower at 65,945.47, reflecting a 0.12% decrease. While the BSE Midcap index registered a 0.09% decline, the BSE Smallcap index managed to post a gain of 0.33%.

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