GIFT Nifty:

The Nifty 50 is projected to open higher, following a 66.50-point increase in the GIFT Nifty February 2025 futures contract.

The Bharatiya Janata Party (BJP) won the Delhi legislative assembly elections with 48 out of 70 seats, marking its return to power in the capital after 27 years, while the Aam Aadmi Party (AAP) secured 22 seats. A party that wins more than the halfway mark of 35 seats can form the government.

AAP leaders Arvind Kejriwal and Manish Sisodia lost their seats to BJP candidates. The BJP's campaign focused on financial assistance for women and senior citizens, subsidies on essential goods, and infrastructure development. AAP's vote share declined by approximately 10% compared to the previous election. The Congress party failed to secure any seats for the third consecutive time but saw a slight increase in its vote share.

Institutional Flows:

Foreign portfolio investors (FPIs) sold shares worth Rs 470.39 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 454.20 crore in the Indian equity market on 7 February 2025, provisional data showed.

According to NSDL data, FPIs have sold shares worth Rs 9090.25 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:

US Dow Jones index futures were up 79 points, suggesting a positive opening for US equities. However, gains were tempered by anticipation of key US inflation data due this week.

Most Asian stocks traded higher on Monday. U.S. President Donald Trump threatened additional tariffs, including on steel and aluminum. This inflationary measure could reduce the likelihood of rate cuts in the US.

The individual indicated that 25% tariffs on all steel and aluminum imports into the US would be announced on Monday, with other reciprocal tariffs revealed on Tuesday or Wednesday.

These comments followed German Chancellor Olaf Scholz's statement that the European Union was prepared to respond within an hour if the US imposed tariffs on European goods, underscoring the potential for an escalating trade conflict.

China's retaliatory tariffs on certain US exports are scheduled to take effect on Monday, with no apparent progress in discussions between Beijing and Washington.

Wall Street experienced some recovery buying after significant declines on Friday, when Trump signaled intentions to impose tariffs on US imports to match levies from US trading partners on American goods. These plans were reiterated on Sunday.

Trump on Sunday said that 25% tariffs on all steel and aluminum imports to the US would be announced on Monday, shortly after his 10% tariffs on China took effect. These tariffs will supplement existing duties on steel and aluminum, implemented during his previous term and maintained by the current administration, albeit at a reduced level. The move is expected to primarily affect imports from Canada, Brazil, and Mexico, the largest steel exporters to the US. Canada is also the leading aluminum exporter to the US.

On Friday, the S&P 500 decreased by nearly 1%, and the NASDAQ Composite fell by 1.4%. The Dow Jones Industrial Average dropped by 1%. The Federal Reserve Chair is scheduled to testify before the House of Representatives on Tuesday and Wednesday, where the impact of tariffs on monetary policy is likely to be a prominent topic.

Domestic Market:

The key equity benchmarks closed with minor losses on Friday, marking the third consecutive day of decline. This occurred despite the Reserve Bank of India (RBI) announcing its first interest rate cut in nearly five years, a move widely anticipated to stimulate economic growth. Analysts suggest that the market's subdued response to the RBI's decision may stem from a lack of clear policy direction from the central bank. The Nifty index concluded the day below the 23,600 mark. While metal and consumer durable shares saw increased demand, shares in PSU banks and FMCG companies fell. The S&P BSE Sensex declined 197.97 points or 0.25% to 77,860.19. The Nifty 50 index lost 43.40 points or 0.18% to 23,559.95.

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