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BSE

• Indian stocks fell due to investor concerns over U.S. jobs data and potential Federal Reserve rate cuts.
• State Bank of India shares dropped 3% after a Goldman Sachs downgrade, contributing to the market decline.
• Thai equities rose nearly 3% due to a stable political environment and robust deal pipeline.
• The U.S. dollar's position was influenced by U.S. jobs data, raising expectations for a potential Federal Reserve rate cut.

The Indian stock market experienced a significant decline on Friday, with the Nifty 50 index falling 0.93% to 24,904.1 points and the S&P BSE Sensex losing 0.96% to 81,410.13. This downturn was primarily driven by investor apprehension ahead of a crucial U.S. jobs report, which could influence the Federal Reserve's decisions regarding interest rate cuts. The markets were also reacting to recent U.S. economic data that raised concerns about the timing of the Federal Reserve's rate reductions.

The U.S. jobs report was a significant concern for investors as it could determine the size and speed of the Federal Reserve's interest rate cuts. A weak jobs report could indicate a slowdown in the U.S. economy, potentially prompting the Federal Reserve to implement a larger rate cut to stimulate growth. This anticipation was influenced by soft economic data that led to increased bets on a 50-basis-point rate cut by the Federal Reserve in their upcoming meeting.

In the Indian market, the stocks of the State Bank of India (SBI) were particularly affected, with a decline of about 3%. This was due to a downgrade by Goldman Sachs to sell from neutral, citing rising headwinds for the bank in terms of growth, margins, and credit costs. This move influenced the banking sector, contributing to the overall decline in the market.

Thai Market Performance and RBI's GDP Growth Projection

Meanwhile, the Thai stock market performed well, with Thai equities jumping nearly 3% to hit a near five-month high. This positive performance was influenced by a combination of factors, including a stabilizing political environment and a robust deal pipeline, which boosted investor confidence. Additionally, a good monsoon and the expectation of a pick-up in rural demand, along with strong investment activity and a sustained current account surplus, contributed to the market's optimism.

Looking ahead, the Reserve Bank of India (RBI) projects GDP growth for fiscal year 2025 to be better than the previous year, expressing confidence in a growth rebound. Factors supporting this projection include expectations of a recovery in the largest market and vertical segments, a healthy pipeline of deals, and the potential for government capital expenditure to pick up pace, which could drive growth. Despite challenges in some quarters, the overall outlook for FY2025 is more optimistic based on these indicators.

U.S. Dollar's Position and Historical Similarities

In the global context, the U.S. dollar's position against the euro and other currencies was influenced by the release of U.S. jobs data, which showed a moderation in job growth. This data raised expectations for a potential interest rate cut by the Federal Reserve. The anticipation of a rate cut can weaken the dollar as lower interest rates make the currency less attractive to investors.

Historically, similar events have occurred where economic indicators, such as jobs data, have significantly influenced market trends and investor behavior. For instance, during the 2008 financial crisis, weak jobs data and other negative economic indicators led to a sharp decline in stock markets and a significant depreciation of the U.S. dollar. Similarly, during the dot-com bubble burst in the early 2000s, weak economic data led to a significant downturn in stock markets and a depreciation of the U.S. dollar.

In conclusion, the recent decline in Indian shares, the performance of the Thai stock market, the RBI's GDP growth projection for FY2025, and the influence of U.S. jobs data on the U.S. dollar's position against other currencies are all interconnected events. They reflect the complex interplay of economic indicators, investor sentiment, and policy decisions in shaping global financial markets. As these events unfold, investors and policymakers alike must navigate this complex landscape with careful analysis and strategic decision-making.