Sensex, Nifty Set To Drift Lower As Dollar And Yields Spike

(RTTNews) - Indian shares may open on a sluggish note Wednesday, with a stronger greenback in the international markets and volatile crude oil prices likely to weigh on sentiment.

Geopolitical tensions will also be in focus after Iran launched missile strikes in Iraq, Syria and Pakistan, citing security threats.

On the macro front, Fitch has affirmed India's sovereign rating at 'BBB-' with stable outlook.

In corporate news, HDFC Bank could be in focus after its U.S.-listed shares fall 7 percent, the most since April 2022 post Q3 results.

Benchmark indexes Sensex and Nifty fluctuated before finishing down about 0.3 percent each on Tuesday. The rupee fell by 23 paise to 83.09 against the dollar.

Asian markets traded mostly lower this morning, following hawkish rhetoric from central bank officials at the Davos World Economic Forum meeting 2024.

The Chinese economy grew 5.2 percent in the fourth quarter from a year earlier, official data showed earlier today, missing analysts' estimates.

Factory output growth quickened at the fastest pace since Feb 2022 in December, while retail sales grew at the slowest pace since September and investment growth remained tepid.

Treasury yields spiked and the dollar index traded at a one-month high amid waning expectations of an early interest rate cut in the U.S. and Europe.

Oil prices fell on expectations that developments in the Red Sea, Gaza and Ukraine will not hurt supply.

U.S. stocks fell notably overnight, with a lackluster start to the earnings season and concerns that the Federal Reserve may not cut interest rates anytime soon weighing on sentiment.

U.S. 10-year yields topped 4 percent after Federal Reserve Governor Christopher Waller indicated in a speech that inflation is nearing its target but the timing and rate cuts will depend on incoming data.

On the macro front, the New York Empire State manufacturing index reported a significant drop to -43.7 in January, the lowest reading since May 2020.

The Dow shed 0.6 percent, the S&P 500 slipped 0.4 percent and the tech-heavy Nasdaq Composite dipped 0.2 percent.

European stocks closed lower on Tuesday as ECB officials downplayed the idea of early rate cuts.

On the data front, reports showed German inflation rose in December and growth in British wages slowed in the three months through November.

The pan European STOXX 600 slipped 0.2 percent. The German DAX eased 0.3 percent, France's CAC 40 edged down 0.2 percent and the U.K.'s FTSE 100 dropped half a percent.