US Inflation, MSCI Rebalancing, and Oil Price Shifts: Key Market Drivers Overnight

Indian Stock Market Expected to Open Cautiously Amid Global Market Volatility

The Indian stock market benchmark indices, Sensex and Nifty 50, are expected to open on a cautious note on Wednesday, following mixed global markets cues. Asian markets traded lower, while the US stock market ended mixed overnight, with the S&P 500 and the Nasdaq falling from record highs.

On Tuesday, the Indian stock market ended sharply lower, extending its sell-off for the fourth consecutive trading session. The Sensex crashed 1,456.04 points, or 1.92%, to close at 74,559.24, while the Nifty 50 settled 436.30 points, or 1.83%, lower at 23,379.55. The heightened fears of a prolonged geopolitical conflict in West Asia have kept investors risk-averse, triggering sustained selling across financial markets.

According to Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services Ltd, market sentiment is likely to remain fragile until there is greater clarity on geopolitical developments and stability in energy prices.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The Asian markets traded lower on Wednesday, following overnight losses on Wall Street, amid concerns over higher oil prices and the ongoing Middle East conflict. Meanwhile, the Gift Nifty was trading around 23,491 level, a premium of nearly 66 points from the Nifty futures' previous close, indicating a positive start for the Indian stock market indices.

In the US, the stock market ended mixed on Tuesday, with the S&P 500 and the Nasdaq easing from record highs, amid profit booking after hotter-than-expected inflation data. The Dow Jones Industrial Average rose 56.09 points, or 0.11%, to 49,760.56, while the S&P 500 fell 11.88 points, or 0.16%, to 7,400.96.

The US consumer prices increased at a brisk pace for a second straight month in April, with the CPI rising 0.6% last month after surging 0.9% in March. Moody's Ratings cut India's economic growth forecast for 2026 by 0.8 percentage points to 6% and lowered its 2027 growth projection for India by 0.5 percentage points to 6%.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

In other news, retail inflation in India rose marginally to 3.48% in April compared to 3.40% in the preceding month, mainly due to an uptick in food prices. India has also raised import tariffs on gold and silver to 15%, with the government increasing the basic customs duty on several categories of gold and silver imports to 10% from 5%.

The MSCI Global Standard Index has seen changes, with Adani Energy Solutions, Federal Bank, Indian Bank, Multi Commodity Exchange of India (MCX), and National Aluminium Company shares being added, while Hyundai Motor India, Jubilant Foodworks, Kalyan Jewellers, and Rail Vikas Nigam Ltd (RVNL) have been excluded.

Gold prices were steady as investors stayed on the sidelines ahead of a key US-China summit, while crude oil prices fell after rising almost 8% over the past three sessions.