Last week, the Sensex touched a low of 16,420, down nearly 900 points for the week.
A higher opening of stock markets across Asia and Europe suggest that equity markets in India, too, would open on a positive note tomorrow.
There could be a small rally, as markets looked oversold. Most benchmark stock indices in Asia and Europe were recovering from two-year lows hit last week. Investors are looking to tomorrow’s Franco-German governmental meeting for solutions to Europe’s sovereign-debt crisis. Domestic markets were closed for the I-Day holiday on Monday.
India’s benchmark share indices would also take a cue from the futures contract of the S&P CNX Nifty index, listed on the Singapore Stock Exchange, which rose 36 points or 0.7 per cent to 5,110 during the early trading hours on Monday. The futures are derived from the 50 stocks on the underlying Nifty Index on the National Stock Exchange, currently trading at 5,072.
However, market players say gap-up openings from current levels may not mean a sharp upside. The markets could consolidate for the next two to three weeks and wait for the crucial meeting of the US Federal Reserve scheduled on September 16, said brokers. The Fed is expected to further stimulate the US economy, as the debt crises has raised recession concerns.
Last week, the 30-share benchmark Sensex of the Bombay Stock Exchange touched a low of 16,420, down nearly 900 points for the week. It then consolidated and finally ended on Friday at 16,840, losing 466 points.
“The Nifty index is likely to fluctuate 100-150 points, up and down, for at least a couple of weeks. The fundamentals have taken a back seat. All eyes are on global events, which will set the trend in the short term,” said Kishor Ostwal, managing director of CNI Global Research.
ABROAD
Share prices in Europe rose on Monday, as economic numbers revived hopes of the recovery remaining on track. Last Friday’s strong US retail sales figures and Monday’s data showing Japan’s gross domestic product shrank less than expected in the second quarter improved the sentiment. In Japan, the economy contracted 0.3 per cent between April and June compared with the previous quarter, due to the effects of the March 11 earthquake and tsunami, but the data beat economists’ forecasts for a 0.7 per cent contraction.
Firm metal prices saw investors buying mining stocks in Europe.
Concerns remain about the ability of European policymakers to effectively handle the euro zone debt crises Britain’s finance minister, George Osborne, said some kind of fiscal union may now be needed for the 17-member euro area. The head of Germany’s leading export association urged the leaders of Germany and France to agree at tomorrow’s meeting in Paris to issue joint euro zone bonds, an idea that Berlin has strongly opposed.
The Stoxx Europe 600 index was up 0.2 per cent. London’s FTSE 100 rose 0.5 per cent. Frankfurt’s DAX was one per cent higher and Paris’s CAC-40 gained 0.7 per cent. In Asia, Japan’s Nikkei Stock Average closed up 1.4 per cent. Hong Kong’s Hang Seng Index jumped 3.3 per cent. The Shanghai Composite Index finished 1.3 per cent higher and Taiwan’s Taiex climbed 2.4 per cent.
South Korea was closed for the Liberation Day holiday. Australia’s S&P/ASX 200 index ended the day with a 2.4 per cent gain. The Dow Jones Industrial Average futures for September delivery were up 63 points at 11,313, and the S&P 500 contract for the same month was up 7.2 points at 1,184. The US market opening will be crucial.
HOME
In the domestic market, among the index stocks, Tata Group stocks (Tata Power, Steel, Motors and TCS) witnessed heavy selling and were down 10-12 per cent. Last week, CLSA downgraded Tata Motors. Infosys, Hindalco, Wipro, Bharti Airtel and Sterlite were other major losers.
Anil Ambani’s Reliance group shares would also be watched. While Reliance Infrastructure posted better than expected results, Reliance Communication was the spoiler. Its net profits were way below analysts’ expectation.
