Indian markets expected to continue rallying this week

The horrendous run of the Indian stock markets finally halted on Friday as Nirmala Sitharaman, the Finance Minister of India, reduced the corporate tax on domestic companies. BSE Sensex and NSE Nifty, the benchmark indices of India, reacted positively on Friday by gaining 1,921.16 and 569.40 points respectively.

The Asian markets have shot up, hoping for an interim tariff deal between the US and China. Both China and the United States have termed their trade talks as constructive and productive. On the other hand, political tensions in Western Asia has made the prices of crude oil spike over 1%. 

In the early hours of Monday, the Australian stocks had gained 0.4%, and the benchmark index of New Zealand was up by 0.2%. Kospi, a South Korean index, was trading a tad lower while Japanese Nikkei is closed due to a holiday. Nifty futures, a Singaporean index was trading in the positive terrain.

The rally in the Asian markets is significantly due to the briefing given by the US trade representative office after holding a two-day talk with their Chinese counterparts. The trade talk was termed productive. Also, it was learnt that a principal level trade talks would be held in October at Washington.

Also Read: US Federal Reserve Slashed 25 Bps, Indian Markets Closed on a High

The United States lifted tariffs on more than 400 Chinese products as many domestic companies requested the government. The trade tension is completely not set as the Chinse official on Friday, surprisingly cancelled their visit o US farms next week on the back of trade talks with the US equivalents. 

Nirmala Sitharaman, the Finance Minister of India, on Sunday pushed over any immediate reduction in the government’s spending to balance this year’s budget amidst the fear of fiscal slippage, threatening to weaken India’s economic stability and fuel prices. 

The September manufacturing surveys are being done by the US and the European Union later today. Investors across the world would carefully follow the surveys. The auto sector, in particular, has taken a beating of late. The auto sales have gone below by over 20% this fiscal year. 

Last week the US dollar gained 0.1% again the Japanese Yen, which is considered a safe haven. The Australian dollar, which is highly risk-sensitive, was trading 0.15% higher. The pound sterling and euro were trading flat to leave the dollar index untouched at 98.94. 

In the commodities front, the Brent crude futures saw a jump of 1.12% to trade at USD 65 a barrel and the US crude futures rose 1.19% to trade at USD 58.78 a barrel. Drone attack on an oil refinery facility at Abqaiq, Saudi Arabia is possibly the cause for the increase in fuel prices.

For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.