Markets opened lower following weak global cues after US reported disappointing economic data on Friday. The S&P CNX Nifty was down 32 points, at 5,455 and the Sensex declined 90 points, at 18,174.
Economists are debating whether US economy may be headed for a double dip recession or a rough patch in the overall recovery. On Friday, the Dow Jones Industrial Average fell -1.42%, breaking the crucial 12,000 level to 11,952, recording it lowest close since March 18.
In Asia markets were trading lower on Monday morning. Japan's Nikkei stock average fell 0.8% due to strengthening Yen and weak economic data from the US. Hong Kong's Hang Seng was down 0.7% due to losses in property and energy shares and China's Shanghai Composite was also down 0.7%.
Back in India market analysts are concerned that the Indian economy may be facing stagflation. Sanjeev Zarbade, Vice President (Private Client Group Research) from Kotak Securities said, "the growth is slowing down even as the inflation remains well entrenched which could lead to “Stagflation.”
Going forward markets will take cues from the May inflation data and Reserve Bank of India's monetary policy this week. The Central Bank is expected to raise rates by 25 basis points to rein in inflation which continues to remain as high as 9 percent on weekly basis. Zarbade said that markets would continue to remain range-bound and may weaken further given ongoing euro-debt crisis, fresh worries on US economic growth and domestic economic risks.
Ashish Chaturmohta, Vice President - Derivatives and Technical Analyst from IIFL Wealth said that Nifty has strong support around 5440 and resistance around 5620 level. If the index sustains below 5440 levels, it fall to 5350 level on downside.
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BSE Oil & Gas index was leading the losses, down 1.1%. Reliance Industries dipped 1.9% in the morning session after it said on Friday after market hours that it would buy Bharti Enterprises’s stake in two joint ventures with France’s AXA. ONGC was off 1.5% and Petronet LNG declined 1.3%.
Realty shares were also weak in the morning session. BSE Realty index slipped 1.1%. HDIL was the top loser, down 1.7%, Indiabulls Real Estate declined 1.3% and Orbit Corporation was down 1.2%.
From the broader markets, the midcap and smallcap indices were trading flat.
Top losers on the Sensex were Maruti Suzuki, down 1.2%, DLF declined 1.1% and Tata Power was also off 1.1%. Only seven components on the Sensex were trading in green, Reliance Communication advanced 1.6%, Cipla was up 1.2% and Bajaj Auto gained 1%.