Indian shares are likely to follow global trends lower on Thursday amidst a range of mixed signals. Concerns about interest rates are resurfacing after the latest meeting minutes from the Federal Reserve suggested that the U.S. central bank may maintain higher interest rates for an extended period.
On a more positive note, the major semiconductor manufacturer Nvidia has projected revenues that surpass expectations for the current quarter, following exceptionally strong first-quarter earnings.
In a significant development for the domestic economy, the Reserve Bank of India has authorized a record-high surplus transfer of Rs. 2,10,874 crores for FY24. This move is expected to boost government revenues and assist in meeting the fiscal deficit target. The surplus transfer could enable the government to either reduce borrowing in FY25 or increase capital expenditure.
The key indices, Sensex and Nifty, managed to record modest gains on Wednesday, driven by the performance of IT, real estate, and FMCG stocks. The Indian rupee appreciated slightly by 3 paise, closing at 83.28 against the dollar.
Asian markets displayed a mixed performance this morning, with U.S. equity futures rising in response to Nvidia Corp.'s robust results.
The U.S. dollar remained near its one-week high, while gold prices fell below $2,400 per ounce amidst hawkish FOMC minutes. Meanwhile, oil prices continued to decline for the fourth consecutive session, settling near a two-month low due to demand concerns.
Overnight, U.S. stocks experienced a lack of clear direction before ultimately closing lower. The minutes from the April 30-May 1 Fed meeting revealed that officials were disappointed with recent inflation data and discussed the potential for further rate hikes should inflation surge. Officials noted that, given the economy's strength, "disinflation would likely take longer than previously thought."
Further complicating the outlook, mixed quarterly results from retailer Target raised questions about the resilience of the U.S. consumer. The Dow Jones Industrial Average fell by 0.5%, the S&P 500 declined by 0.3%, and the tech-heavy Nasdaq Composite edged down by 0.2%.
In Europe, stocks dropped for the second consecutive session, hitting one-week lows on Wednesday after data indicated that U.K. inflation rose at its slowest pace since July 2021, dampening hopes for a June rate cut. The pan-European STOXX 600 fell by 0.3%, the German DAX dipped by 0.3%, and both France's CAC 40 and the U.K.'s FTSE 100 declined by around 0.6%.
