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The Indian stock market is expected to open lower on Monday following weak global cues and is likely to consolidate further. Benign domestic macroeconomic data and outflow of foreign capital is likely to weigh on markets.
The Indian stock market is expected to open lower on Monday following weak global cues and is likely to consolidate further. Benign domestic macroeconomic data and outflow of foreign capital is likely to weigh on markets.
Investors may react to June factory output growth slipping to a 3-month low, while trade cautiously ahead of other key economic data releases in this holiday-truncated week, including wholesale price index (WPI) and July retail inflation data, exports and imports numbers and forex reserves data.
Investors may react to June factory output growth slipping to a 3-month low, while trade cautiously ahead of other key economic data releases in this holiday-truncated week, including wholesale price index (WPI) and July retail inflation data, exports and imports numbers and forex reserves data.
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On Friday, domestic equity benchmarks Sensex and Nifty ended lower for the second consecutive session dragged by negative global cues and the dollar’s rise against its major global peers.
“Domestic equities continued with its weakness on account of subdued global cues and hawkish commentary from RBI. In the absence of any major trigger and uncertain global cues, we expect the market to consolidate in the range,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.
Asian Markets
Asian markets declined following weakness on Wall Street and concerns over China’s worsening property slump.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased another 0.2%, after falling 2% last week.
Japan’s Nikkei 225 eased 0.1%, while the Topix gained 0.12%. South Korea’s Kospi fell 0.3% and the Kosdaq declined 0.85%
Hong Kong’s Hang Seng index futures traded below the 19,000 mark for the first time in almost a month. The index was at 18,857 as compared to the previous close of 19.075.19.
In Australia, S&P/ASX 200 lost 0.37%.
Investors will look out for key data from Japan and China this week. Japan will release its second quarter gross domestic product data on Tuesday and inflation data for Friday, while China’s industrial production and retail sales for July as well as house prices data will be released on Tuesday.
Meanwhile, Gift Nifty was trading lower at 19,449 as compared to Nifty futures’ Friday’s close of 19,503, indicating a negative start for the Indian benchmark indices.
Wall Street
The US stock market ended mixed on Friday as higher than expected producer price index (PPI) lifted treasury yields. The data lowered the bets of no rate hike by the US Federal Reserve in September to 88.5% from 90% earlier, Reuters reported.
The Dow Jones Industrial Average rose 105.25 points, or 0.3%, to 35,281.4. The S&P 500 fell 4.78 points, or 0.11%, to 4,464.05, while the Nasdaq Composite ended 76.18 points, or 0.56%, lower at 13,644.85.
The US producer price index rose 0.8% in the 12 months leading to July, up from a 0.2% rise in the previous month, led by increase in cost of services.
The two-year US Treasury yield climbed to 4.88%, while the yield on 10-year Treasuries rose 5 basis points to 4.15% on Friday.
China’s Property Crisis
Country Garden, China’s top private property developer, will suspend trading of its 11 onshore bonds from Monday. Country Garden’s Hong Kong shares hit a record low on Friday amid fears the company is preparing for a debt restructuring.
The developer last week said it had not paid two dollar bond coupons due on August 6 totalling $22.5 million, adding market fears that the developer was slipping into repayment troubles. The company had warned it could report a loss of up to $7.6 billion for the first half, Reuters reported.
June IIP
India’s factory output rose to 3.7% in June, down from 5.2% in May, due to weaker manufacturing growth, official data released on Friday showed.
FII Selling
The foreign institutional investors (FIIs) have turned sellers in the Indian stock market this month so far amid strong US dollar and spike in Treasury yields. Till August 11, FIIs have net sold Indian stocks to the tune of ₹7,546 crore, as per data on the exchanges.
“In view of the strong dollar and high US bond yields FPIs may continue to sell in India. Also, since the markets have rallied smartly during the last three months, some profit booking by FPIs would be rational and can be expected,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Adani Ports’ auditor Deloitte resigns
Deloitte Haskins and Sells resigned as statutory auditor of Gautam Adani-led conglomerate’s port business arm Adani Ports and SEZ Ltd, citing differences of opinion. Deloitte’s resignation letter as Adani Ports’ statutory auditor revealed that it resigned prematurely primarily due to lack of clarity on transactions with certain parties alleged in the January 24 Hindenburg Research report, and because of the company’s resistance to conduct an independent external evaluation.
(With inputs from Reuters)
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