Negative opening likely as Asian peers remain clueless

The outlook for the day is a shaky start despite the strong overnight close on the Wall Street. At the time of writing, SGX was marginally lower by 13 points at 11,918 level. The Nifty has broken below an important support of 10,935 in yesterday’s session and the selling pressure is likely to extend once bears pierce below the prior week low of 10,902. In today’s session, commanding the investors’ attention would be the auto stocks after Road Transport Minister Nitin Gadkari’s comment that the government has set no deadline to ban the production of petrol and diesel vehicles or for automobile manufacturers to switch to electric vehicles (EVs). Also, the watchdog SEBI on Wednesday eased compliance requirement for FPIs which might act as a booster for the markets.

Major Asian indices were mostly directionless in Thursday trade despite a strong close on the Wall Street overnight as upbeat earnings from retailers strengthened sentiments that consumer spending will support the US economy. The Japanese stock index Nikkei 225 is marginally higher by 0.14 per cent, China’s Shanghai Composite index is almost unchanged, while Hong Kong’s Hang Seng has shed 0.45 per cent.

Back home, markets opened the session on a flat note and selling pressure emerged right from the start. After an initial setback, the bears took a pause only to pounce back on the bulls vehemently in the second half of the trading session as the indices ended the session at intra-day low levels. The Nifty ended down by 0.89 per cent below the 11,000 mark and BSE Sensex shed 0.72 per cent to close at 37,060. The selling was more severe in the broader market indices with Nifty Midcap and Smallcap plunging 1.57 per cent and 1.92 per cent, respectively. On the sectoral front, all the sectors underperformed, with Nifty PSU Bank, Nifty Metal and Nifty Realty being the top losers. 

On Wednesday, the US stock markets moved strongly higher earlier in the day and managed to hold on to the gains throughout the day. The sentiments on the Wall Street turned positive after a batch of retailers delivered upbeat earnings and this overshadowed fears that the domestic economy may be starting to slow. Meanwhile, the minutes of the Federal Reserve’s July meeting were released and, according to the minutes, Fed officials viewed the July interest rate cut as a ‘recalibration’ of the monetary policy and not as the start of a long string of reductions. The Dow advanced 0.9 per cent, the S&P 500 rose 0.8 per cent and the tech-heavy Nasdaq jumped 0.9 per cent.  

The European markets on Wednesday closed on a firm note. Germany’s DAX and France’s CAC 40 climbed up 1.7 per cent and 1.3 per cent, respectively, while UK’s FTSE 100 added 1.11 per cent.