Markets May Open Sideways, Eyes GDP Data

The Indian markets may open sideways in line with the global cues. The SGX Nifty is trading down by 4.5 points at 5,320.5, indicating a negative start-up in the market today. The market will probably trade in a very narrow range in the first half of the session and investors would watch out for the GDP data for the June quarter, scheduled to be released today, for further cues.

The Indian market yesterday ended marginally higher by almost 0.30 per cent after experiencing a volatile trading session as initially the markets were trading lower in the red zone but recovered over the last couple of hours. This snapped the three-day losing trend as traders lifted the market higher on the back of the August expiry.

To reiterate, the GDP for the March quarter had been at 5.3 per cent, well below the street expectation of 6.1 per cent and continued its declining trend for eight consecutive quarters. The general market consensus report says that the GDP for the June quarter would be in the range of 4.9 to 5.2 per cent, thus indicating that the downward trend will continue into the ninth quarter as well. One should note that if the GDP is below 5 per cent, there would be negative sentiments on the street with a strong feeling that the economy has taken a severe beating and faces further slowdown in terms of growth.

Overnight, the U.S. markets ended lower in the negative territory with major indices like Dow Jones, S&P 500 and Nasdaq closing lower in the range of 0.8 to 1.1 per cent. This was after traders and investors on Wall Street speculated that they might not see any positives in the third round of easing after a market report suggested that the economic scenario of the U.S. has certainly not been that bad. Media reports suggest that the Federal Reserve might again postpone QE3 and would consider it later if required. One has to keenly track the world markets as they would react to the two-day meet at Jackson Hole where central bankers and finance ministers from around the world will congregate to discuss economic measures.

The European markets also dipped lower with the FTSE, CAC and DAX closing in the range of 0.4 to 1.7 per cent. This was after a Bloomberg report suggested that data from Germany added to the evidence that global growth was slowing down. In Europe, German unemployment increased for a fifth straight month in August while the economic confidence in the euro area fell to a three-year low, much more than economists had forecasted.

Taking cues from the overnight global markets, the Asian shares also have opened lower with major indices like Hang Seng, Nikkei and Shanghai trading in the range of 0.1 to 0.9 per cent. This was in the wake of a media report which said that Japan’s industrial output showed a surprise drop in July, with an equally bleak view for the months ahead, even as household spending for the month indicated unexpected strength. Further earning from some of the major companies in China declined sharply, thus disappointing the markets.