Market likely to open in the red amid negative global cues
Indian shares look set to open lower on Friday as Asian markets are trading in the negative territory and sell-off was seen in the US markets overnight. The SGX Nifty is trading with loss of 60 points at 10,548 levels, indicating negative start to the day. All eyes will be on the RBI meet outcome, and market participants are expecting a rate hike of 25 bps, while some even expect a hike of 50 bps and if the latter turns to out to be true, the rate sensitive stocks may come under pressure.
Asian shares were a sea of red on Friday taking cues from a slump in the US stocks, which tanked overnight. The Japanese market Nikkei 225 index has shed 0.74 per cent and Hong Kong’s stock market has lost 0.64 per cent, while China’s market is closed for a public holiday.
Back home, Thursday turned out to be a horrendous day of trading for the key benchmark indices as these witnessed the biggest single day loss on a closing basis in the recent past. Markets opened the session with a significant gap on the downside, and as the day progressed, things got worse. However, there were a couple of attempts made by markets to bounce back, but all got foiled under selling pressure, and in the end. Nifty ended the session below the 10,600 mark and BSE Sensex settled below 35,200 mark. The broader indices traded in tandem with the frontline indices, with Nifty Mid-cap and Small-cap indices plunging over 2 per cent each. Talking about sectoral indices, all the indices ended in the red with Nifty Pharma losing the most by over 3 per cent.
On the Wall Street a sharp sell-off was seen on Thursday, with the Dow Jones snapping a five-day winning streak. The sell-off was seen on the back of recent jump seen in the US treasury yields, with the 10-year yield jumping to highest in 7 years. The higher interest rates are generally negative for stocks since investors will put money in safe interest bearing instruments, rather than investing in stocks when interest rates are higher. In the economic news, it was a mixed day as jobless claims unexpectedly declined and factory orders increased 2.3 per cent during the month of August, which was a solid reading. The Dow Jones Industrial Average slipped 201 points to close at 26,627, the Nasdaq Composite index nosedived 146 points to finish at 7,880, and the S&P 500 index fell 24 points to end at 2,902.
The impact of the rise in the US treasury yields was felt by European market as well, and as a result, European markets tumbled on Thursday. The DAX of Germany dropped 0.35 per cent, the CAC of France plunged 1.47 per cent and the UK’s FTSE 100 finished lower by 1.22 per cent.