Markets May Open Negative Ahead Of Expiry

Indian markets may open negative ahead of the expiry of the August derivatives series. The SGX Nifty is currently trading 11 points down to 5280.

The talks of rate cut are again gaining ground in the country. RBI chairman in the week said that the rate cut is unlikely due to the high inflation. Yesterday, ICICI chairman, K V Kamath said that RBI should cut the repo rate by 100 basis points for the growth of the country. He said that RBI should cut the rate boldly in order to increase the consumption in the country.

Ahead in the week, the GDP figures for the April- June period are expected which would be keenly watched by the markets. The Indian equities have bee constantly on slide for last four trading sessions discounting lower GDP growth. The markets are expecting the GDP growth of 5.2%, down from 5.3% in the earlier three month period. This slow growth in the GDP is due to the domestic factors unlike the one seen during the global meltdown which had an angle of the global recession. The business confidence has declined, FDI is stalled, Interest rates are high and consumption is at slower pace. GDP figures when they come will hit the markets.

Meanwhile the political crisis in the country may worsen further as CAG has said that the loss in the coal block allocation pegged at Rs 1.86 Lakh crore was on the conservative basis. It is now saying that the value of the reserves go up 10 times if the assets are priced at the e-auction coal price or landed cost of the coal price. Now that coal bomb will hurt the government further and the demand for the PM’s resignation may be furiously put forth.

News agencies have also reported that the finance ministry is currently working on a plan to avoid the credit rating downgrade. Articles say the ministry wants to break the perception of policy paralysis and exceeds some harsh decision to be taken soon.

Back to equity markets, US markets yesterday closed in marginally positive as the US economy in the second quarter grew slightly better than expected but the pace of the growth is still lower to call off the monetary easing. All the three key indices managed to end the day in green ahead of the much-awaited speech from Ben Bernanke, Chairman Federal Reserve.

In South America BRIC country, Brazil has cut the interest rates to the record low at 7.5%.The Brazilian market however was down 1.7%.

The oil prices in the international market have fallen as the Hurricane Isaac spared the US Gulf coast due to which inventories have unexpectedly climbed up.

The euro markets yesterday showed mixed trend where FTSE and CAC closed in negative while DAX managed to end the day in green. Spot crude oil was down 0.08% while Futures were down 0.6%.

Asian markets at this hour are in red over weak data from Japan and declining commodity prices. In Japan the retail sales in July turned red showing a drop of 0.8% on YoY basis.

In a recent research report, Australian investment bank Macquarie has said the there is Growing interest among Western companies to manufacture closer to their home markets which is a bad news for Asian markets and logistics companies. The heavy impact could be seen on China which is a top manufacturing country. This will add more fears of slowdown in Chinese economy.

In conclusion today, we expect weak opening in the market. Market is likely to remain choppy ahead of derivative series expiry.