Markets may extend losses in opening trades following selling pressure Across Asia after S&P downgraded United States credit rating to AA+ from AAA, first time in 70 years. The Nifty futures on the Singapore Exchange slipped 106 points, at 5,110.
The US credit rating cut and sell-off Italian and Spanish bonds continued to weigh on the markets. Japan’s Nikkei Stock Average slipped 1.3%, Hong Kong’s Hang Seng lost 3.7% and China’s Shanghai Composite was off 2.4%.
In India, analysts are concerned that there may be a reversal of foreign institutional investor flows which have been driving the Indian markets in the pas few years. There are immediate fears for the export related sectors such as IT. However, a sustained dip in commodities such as crude and metals would be help ease inflation fears.
Over the weekend Finance Minister allayed growth concerns, Pranab Mukherjee said, India will be able to sustain growth and fight off negative sentiments that are spreading across the globe, as the fundamentals were strong.
Also, over the weekend Group of seven nations met and discussed how to avert a collapse in global confidence. The G7 members decided to inject liquidity and take necessary measures in the wake of volatile currency moves.