Global Factors Bleak, Weak Opening Expected

The Budget session of the Parliament commenced yesterday and the Prime Minister sought a productive and constructive session of Parliament. This was followed by the President ensuring that the government is taking steps to revive investment activity and investor sentiment. However, the markets saw a heavy downfall in yesterday’s trading. The Sensex ended the day lower by 317.39 points at 19325.36, down by 1.62% and the Nifty closed lower by 90.80 points at 5852.25, down by 1.53%, marking the biggest single day loss in more than seven months. Today too, aided by nervousness around the budget and affected by global economic cues, markets are expected to see a weak opening.

Market participants have been heavily banking on some announcements. There have been a large number of expectations revolving around this budget. Many of these slated wishes may turn into disappointment as concentration would be levied more on the macroeconomic front, than on industry-specific revival measures. Erratic movements are expected to take place in the markets due to the uncertainty caused by the event. In this volatile environment, investors should remain cautious and concrete directional trends would start shaping up only post announcement.

On the international front, global markets would be keeping a keen eye on Germany. GDP, Business Expectations, Current Assessment and the Ifo Business Climate Index are all scheduled to be announced later today. Released yesterday, preliminary readings of the German manufacturing PMI showed a slight increase while the services PMI showed a decline. Today’s figures thus would give more clarity on the economic health of Germany and in turn, also determine the directional trend for Europe today.

A host of data was released in the US yesterday, overall causing markets to end lower in the range of 0.33% and 1.06%. Continuing jobless claims came in higher at 3148k compared to the previous 3137k. Initial jobless claims rose too, from 342k to 362k. Moreover, the Philadelphia Fed Manufacturing Index showed a sharp decline to -12.5. The previous reading was -5.8.

Overall, the situation seems quite bleak in the US and Europe. This coupled with pre-budget uncertainty is likely to result in a weak opening for today.