On Tuesday, Indian stock markets are anticipated to open slightly higher following two consecutive sessions of declines. However, a sense of caution may persist due to worries that a new cost-effective Chinese artificial intelligence model could challenge prominent AI leaders like Nvidia.
Sentiments are further complicated by tariff concerns after U.S. President Donald Trump announced impending tariffs on foreign-produced semiconductors, pharmaceuticals, and certain metals to boost domestic U.S. production of these goods.
In significant U.S. developments, the Senate has confirmed Scott Bessent as the Treasury Secretary under President Trump. Bessent is advocating for new universal tariffs on U.S. imports, beginning at 2.5 percent and increasing gradually.
Domestically, the benchmark indices Sensex and Nifty both declined by over 1 percent on Monday, marking a second consecutive session of losses. The declines were driven by disappointing corporate earnings, uncertainties over U.S. trade and tariffs, and ongoing foreign fund outflows.
The Indian rupee weakened by 11 paise, closing at a provisional 86.33 against the U.S. dollar.
On Monday, the Reserve Bank of India unveiled several steps to inject more than INR 1 trillion into the banking system, which many analysts see as setting the stage for potential policy easing on February 7.
These measures include the purchase of government securities worth INR 600 billion through open market operation auctions in three phases on January 30, February 13, and February 20. Additionally, the central bank announced a 56-day variable rate repo auction of INR 500 billion scheduled for February 7 and a USD/INR Buy/Sell swap auction for USD 5 billion with a six-month term set for January 31.
In Asian markets, trading reflected mixed sentiments this morning, with Chinese and South Korean markets closed for Lunar New Year celebrations.
The dollar index rose in Asian trading, while Treasury yields increased in anticipation of upcoming Federal Reserve and European Central Bank meetings.
Gold prices remained stable, whereas oil prices inched up slightly after experiencing a 2 percent drop on Monday.
U.S. stocks concluded the day lower on Monday, with technology stocks experiencing significant selling pressure after DeepSeek's technological advancement raised doubts about Silicon Valley's substantial AI capital expenditures and the long-term viability of the U.S.'s technological dominance in artificial intelligence.
The Nasdaq Composite, heavily weighted in technology, plummeted by 3.1 percent, the Dow Jones Industrial Average fell by 0.7 percent, and the S&P 500 decreased by 1.5 percent.
In Europe, stock markets showed little change on Monday, as gains in defensive stocks helped offset losses in the technology sector.
The pan-European STOXX 600 ended with a slight downward bias. Germany's DAX dropped by 0.5 percent, France's CAC 40 eased by 0.3 percent, while the U.K.'s FTSE 100 closed marginally higher.
