Dr. Rajan To Decide Markets Course On A Gloomy Day

Quite in line with the global cues and an anticipated rate hike by US Federal Reserve, Indian bourses presented quite a gloomy picture at the start of the current week. As already Federal Reserve Chair Janet Yellen has clearly indicated that they are on course of increasing interest rates by December, New York Federal Reserve President William Dudley marked that first hike could come in the month of October itself. This has sent shivers down the spine of Indian markets. Crucial bimonthly review of monetary policy by RBI would take place on Tuesday and already 25 basis point interest rate cut has been discounted by the markets, which seems to be the only possibility considering the present state of economy and bad monsoon. Considering all this Indian bourses showed a downward trend as Benchmark BSE Sensex declined by 0.95% to close at 25616 points, while broad based NSE Nifty tumbled 0.93% to close at 7795 points on Monday.

In fact negativity was quite visible across the globe on the heels of Federal Reserve expected action and overall global slowdown as global markets are eagerly waiting the latest Chinese numbers with baited breadth that are slated to come on Thursday. European markets were in a kind of mess on Monday as all major indices showed decline with CAC 40 leading the downturn with 2.76% drop followed by FTSE, DAX and Euronext 100 which declined by 2.46%, 2.12% and 2.43% respectively.

US markets also felt the jitters of the global gloom and major indices persistently declined on Monday. In fact the decline was more than fierce as global concern of slowdown has emboldened across the globe, which trips US markets in a big way despite better than expected show by the domestic macro economic factors. Crucial Dow Jones industrial average tumbled to 16001 points posting a decline of 1.92% on Monday, while, S&P 100 and Nasdaq declined 2.57% and 3.04% respectively on Monday trade.

Asian indices felt the ripple effect of global turmoil on Tuesday as all the major indices opened in red, depicting quite a rout. In the morning trade Japans Nikkei 225 was trading at 3.34% low due to the negative sentiments flowing from the west. SSE composite and STI too trading quite low with decline of 1.30% and 1.39% respectively. Hong Kong’s Hang Seng was also trading in red with 3.39 % decline.

Conscious over the much hyped RBI action regarding anticipated rate cut, benchmark index SGX Nifty depicting Indian market was also trading range bound with a drop of 1.48%. Having said that now all eyes are on Dr. Raghuram Rajan and anything above 25 basis point cut would be a feast for the markets, till then Indian bourses would remain sluggish and may trade in a range bound manner in the morning in an overall gloom across the world.