The Indian markets may see a red opening after two days of pullback on the back of negative cues from the US and the Asian markets. The SGX Nifty which is an indicator to the Indian opening is trading down 61 points at 5,531.
In the US markets yesterday, the Standard & Poor's 500 index, like other major Wall Street indices, fell more than 2 percent, its biggest drop since August 11. Growth in the U.S. manufacturing sector slowed sharply in May, with the Institute for Supply Management's index of national factory activity falling to its lowest level since September 2009. The sudden spill in U.S. stocks sent investors scurrying to the liquidity of the U.S. government bond market and sent the benchmark 10-year yield below 3 percent.
Taking cues from developments overnight, the Asian markets too started in the negative. The top losers among the indices aare Hang Seng and Nikkei losing 1.5% each.Political uncertainty also loomed over Tokyo, with a former prime minister joining the swelling ranks of ruling party rebels trying to oust Prime Minister Naoto Kan, raising the risk that a no-confidence vote will pass in parliament on Thursday forcing him to quit.
Readings of economies around the world from China to the United States have been for the most part undershooting forecasts, raising questions about how well risky assets will hold up once the Federal Reserve's $600 billion bond buying programme ends this month.
The macro condition in India is not very strong either with the increasing borrowing rates and an ever rising inflation.The auto sales numbers relaesed yesterday reflected these worries. The decline in the growth of the six core infrastructure industries in the month of April along with the PMI index falling to a four month low reflects the weakness of our economy.
HDFC Securities in its morning market round up states that 5,600 could be the next major resistance on Nifty and for the Sensex which made a bullish indication for the fifth consecutive day, 18,515 is the level to watch out.