Stock Market Today: Nifty, Sensex Open Gap-Up; Ace Market Analyst Ajay Bagga Decodes - Top Factors

The Indian equity markets opened higher on Thursday on the backdrop of the Israel-Hamas ceasefire. As US markets zoomed overnight, Market expert Ajay Bagga decodes the key factors affecting the market in the near term.

Ajay Bagga’s Market Outlook
1. Lower than estimated US Core CPI , strong earnings from major US financials from JP Morgan to Wells Fargo to Citibank to Goldman Sachs and the announcement of a ceasefire agreement between Israel and Hamas set the stage for a very strong rally in the US markets.

2. Across asset classes, from gold to oil to cryptocurrencies to the huge US Treasury markets, there was a similar rally, while the US dollar was down with the DXY at 109 levels.

Oil Prices Surge
3. Oil prices went up as US inventories came down below estimation as fears of Russian oil supply disruption remained on crude oil markets. The Israel-Hamas ceasefire was a positive that toned down the price rise in crude oil to some extent.

4. The Indonesian central bank chose to push economic growth over the defence of a falling Rupiah by announcing a surprising interest rate cut.

5. Fed Futures moved up the probability of the first Fed rate cut of this year from Sep/Oct to July 2025, while the probability of two rate cuts by the Fed this year went up to 60% .

Germany's Economic Struggles
6. Germany’s economy shrank for a second consecutive year in 2024 and is unlikely to grow much in 2025, laying bare the challenge for the country’s new government once snap elections are held in February. With lingering effects of the energy crisis, stifling red tape, a dearth of skilled workers and weak global demand for its exports, few foresee growth picking up quickly. Germany’s car industry in particular is bracing for another tough year as intensifying competition from China and the wavering transition to electric vehicles weigh on sales.

7. Wall Street stocks posted their biggest rally since Trump’s election victory which saw rapid rallies on the lines of the " Trump Trade". We are now seeing the "Trump Inauguration Trade" occupy centre stage. The S&P 500 closed Wednesday 1.8% higher, the benchmark’s best day since the November election, which erased its 2025 decline. The tech-heavy Nasdaq 100 climbed 2.3%.

8. Korea’s central bank surprised market watchers by keeping benchmark rates unchanged at 3%. Economists polled by Reuters had expected the Bank of Korea to cut its policy rate by 25 basis points.

9. Shares in Asia followed Wall Street higher Thursday as easing US core inflation kept alive the prospect of Federal Reserve rate cuts this year. Gauges in Australia, Japan and China all notched gains, sending an index of Asian equities higher for a third day.

10. UK inflation also came down, raising hopes for further rate cuts by the Bank of England.

11. Canada announced that it has drawn up a list of US dollar 105 billion of US exports that it will target with retaliatory tariffs if the incoming Trump administration announces tariffs on Canadian goods being imported by the US .

12. Nifty and Sensex opened with a gap-up, however, the continued FPI selling in 2025 as well as the domestic issues of a slowing economy and a muted earnings outlook mean it will be tough for bulls to create a longer-lasting "short squeeze'. Foreign investors are net long 15% while holding record shorts in a heavily oversold market that is reflecting global sentimental fragility and Indian fundamental weakness for the short term . In that scenario, a sustained recovery in Indian markets will require strong global sentiment, a slowdow of the sharp FPI selling numbers and an incipient recovery in the Indian fundamentals based on some counter-cyclical fiscal and monetary policy moves.

13. For now global markets are basking in the triple factor US Goldilocks environment of a strong US macro, strong US corporate earnings and softening inflationary impulses. 

14. Over to the “Trump Inauguration Trade."