Market Is Likely To Open Flat To Negative

Indian benchmark indices surged nearly one per cent, posting their highest close in two weeks, on the back of positive IIP and inflation numbers for July and as investors shrugged off weak Chinese data and uncertainty whether the US Federal Reserve would hike rates later this week. The Sensex ended higher by 246.49 points or 0.96% at 25,856.70 and the Nifty ended up by 82.95 points or 1.06% at 7,872.25. The BSE Mid-Cap index rose 1.27%, outperforming the Sensex. The BSE Small-Cap index gained 0.8%, underperforming the Sensex.

The fall in August WPI inflation, which shrank further to (-)4.95% against (-)4.05% in July giving renewed impetus to calls for a rate cut by the Reserve Bank of India in its next bi-monthly policy meet on September 29. Also, industrial production expanded at better-than-estimated 4.2% in July this year compared to the same month last year as manufacturing activity and offtake of capital goods improved.

The U.S. stock market lower Monday as more signs show China’s economic growth is slowing down, and sent commodities such as copper and oil sliding again. At the same time there was a great deal of caution ahead of this week’s US Federal Reserve meeting. The S&P 500 fell 8.02 points, or 0.4%, to settle at 1,953.03. The Dow Jones Industrial Average declined 62.13 points, or 0.4%, to 16,370.96 and the Nasdaq Composite closed 16 points, or 0.3%, lower at 4,805.76.

European stocks fell Monday as investors prepared for the marquee event for global markets this week: the U.S. Federal Reserve’s decision on interest rates. In Europe, Germany's DAX closed with a gain of 0.1% while France's CAC-40 lost 0.7%. The FTSE 100 index of leading British shares slipped 0.5%. The Stoxx Europe 600 slipped 0.6% to end 353.3 after rising earlier by as much as 0.9%.

The price of oil fell on weakness in the gasoline market brought on by high fuel supplies and the end of the summer driving season. U.S. crude fell 63 cents to close at USD 44 a barrel in New York. Brent Crude fell USD 1.77 to close at USD 46.37 a barrel in London. Copper dropped 5 cents to USD 2.41 a pound.

Asian shares traded mixed early Tuesday, as boosting Japanese shares, amid speculation policy makers may signal more stimulus where as Shanghai shares lead losses. Japan's Nikkei stock index rose 1.33% as investors awaited the outcome of the Bank of Japan's two-day policy meeting later this session. China's Shanghai Composite index declined 1.66%, trimming losses slightly after opening down 2.3%. Banks dragged Australia’s S&P/ASX 200 index down 1.1% following a sudden change in the country's leadership. South Korea's Kospi index pared early gains to dip back into neutral territory.

A SGX CNX Nifty Index future for September delivery was down 20.5 points at 7,854. Indian market is likely to open flat to negative. Going forward, this week shall be volatile due to Fed meeting on Sept. 16-17.