Positive global cues may boost domestic shares

GIFT Nifty:

The Nifty 50 is projected to open higher, following a 11.5-point increase in the GIFT Nifty February 2025 futures contract.

Institutional Flows:

Foreign portfolio investors (FPIs) sold shares worth Rs 1,682.83 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 996.28 crore in the Indian equity market on 5 February 2025, provisional data showed.

According to NSDL data, FPIs have sold shares worth Rs 4314.85 crore (so far) in the secondary market during February 2025. This follows their sale of shares worth Rs 81903.72 crore in January 2024.

Global Markets:

Asian stocks climbed on Thursday, mirroring gains in US stocks and bonds. This positive movement comes despite a week marked by trade tensions, underwhelming tech earnings, and mixed US economic signals.

The yen strengthened against the dollar for a fourth consecutive day, fueled by remarks from Bank of Japan official Naoki Tamura, who suggested Japanese interest rates could reach 1% in the latter half of fiscal year 2025.

Market attention now turns to Friday's US jobs report and its potential impact on Federal Reserve policy.

US indices advanced on Wednesday, supported by lower Treasury yields after purchasing managers index data indicated a slowdown in the US economy, particularly within the manufacturing sector. The ISM Services PMI fell to 52.8 in January from 54.0 in December, missing expectations for a reading for 54.0. This data fueled speculation that a moderating US economy might encourage the Federal Reserve to reduce interest rates, even with inflationary pressures stemming from trade tariffs. Separately, better-than-expected ADP nonfarm employment data unsettled markets due to its potential to foreshadow a robust nonfarm payrolls figure for January. Private payrolls increased by 183,000 during the month, according to data from payrolls processor ADP, above the expected 148,000 growth.

Apple Inc. saw a slight dip after reports surfaced of Chinese scrutiny of its App Store. Chipmakers, notably Nvidia, provided significant uplift to Wall Street, particularly following indications from Alphabet and its competitors of substantial increases in spending on artificial intelligence infrastructure in 2025. However, Alphabet shares fell over 7% due to weaker-than-anticipated cloud revenue, a segment closely linked to AI.

The NASDAQ Composite underperformed other major indices, closing with a 0.2% gain. The Dow Jones Industrial Average rose 0.7%, while the S&P 500 advanced 0.4%.

Domestic Market:

The key equity benchmarks closed lower on Wednesday, weighed down by weakness in heavyweight stocks as the US-China trade war escalated. Investors are also focused on the Reserve Bank of India's (RBI) monetary policy meeting, which began on 5 February under the new central bank governor. The market widely expects a rate cut when the meeting concludes on Friday. While metal and PSU bank shares saw demand, realty, FMCG, and consumer durable shares declined.

The S&P BSE Sensex tumbled 312.53 points or 0.40% to 78,271.28. The Nifty 50 index fell 42.95 points or 0.18% to 23,696.30.

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