A report by the Union Bank of India, explains the loss in Indian markets due to global rate cuts amidst fluctuating local economic fundamentals.
The bond market witnessed mild action. The 10-year government bond yield eased to 6.82% below the previous session, whereas the yield on the 5-year paper stood unchanged at 6.76% cuts—a marginal alteration indicating a fairly skittish mood among investors due to global ambiguities.
The Indian rupee also weakened. It closed at Rs 84.37 against the US dollar, down from Rs 84.28 in the previous session. According to the analysts, the rupee is under pressure due to capital outflows as investors are parking their money in safe havens abroad.
Indian stocks plummeted more than 1% and erased gains in intra-day deals. The market responded to the result of the recent US presidential election that stoked global uncertainty. Changes in politics, together with key central bank decisions, conspired to create a cautious atmosphere for Indian equities.
In the commodities market, prices of Brent crude fell as the forecast suggested lower demand, while prices of gold slightly appreciated as investors moved into safe-haven assets with the increase in market uncertainty.
Abroad, the Bank of England lowered its key interest rate by 25 basis points to 4.75%. The cut was in line with BoE’s plan to combat continuing inflationary pressures, which fell gradually over several months. Over in the US, the Federal Reserve, too, cut its key interest rate 25 basis points. As if to belie optimism in US economic recovery against the election results.
In Asia, the People’s Bank of China maintained its supportive monetary policies. Governor Pan Gongsheng again tried to reassure foreign investors. Signaling the commitment of the bank to growth and openness to markets.
In Europe, German industrial production fell 2.5% in September, while the country’s manufacturing sector tipped into contraction. Meanwhile, Eurozone retail sales rose 0.5% on a month-over-month basis, reflecting decent consumer expenditure amid overall caution.
According to the European Union’s Climate Change Service, 2024 is expected to be the hottest on record. This is only weeks ahead of the UN COP29 climate summit, where countries debate raising finance for climate projects.
In the national context, Niti Aayog CEO of BVR Subrahmanyam claimed that India could join the RCEP and CPTPP free trade agreements. Such a partnership could facilitate a path for empowering Indian MSMEs, which form 40% of the country’s exports.
ANI
