Bad Day Ahead?

Global cues have been unfavourable since last week. The Indian markets, amid this sour sentiment, have also seen some suppressed trading activity that has mostly ended the day without gains. Although the closing on Indian markets yesterday was flat, it was majorly on account of gains in RIL ahead of its AGM that is scheduled to be held today. The street has been expecting new announcements on the telecom front along with impressive capital expenditure plans for the telecom and retail arms and some positive outlook in oil and gas.

RIL has the potential to give the markets some base when it comes to losses. But negative global cues are strong. Will they overpower RIL and put markets through another bearish session?

In the US, ADP (Automatic Data Processing ) reported that private sector employment increased by 135000 in May 2013, up from 113000 in April 2013. However, this number was far below market expectations of 170000. What was more daunting was that the Labor Department separately reported the biggest drop in labour costs since at least 1947. This combined with the pessimism over Quantitative Easing led to a fall in the US markets of between 1.27% and 1.43%.

In Japan, Prime Minister Shinzo Abe revealed plans to attract foreign funds and boost wages and investment. However, tough decisions in order to fix the economy were avoided, failing to meet market expectations.

In Europe, euro-zone retail sales dropped 0.5% in April 2013, more in gravity than the 0.2% decline registered in March 2013.

Macroeconomic data across the globe has been negative. While losses in US equities were greater than 1%, the FTSE, DAX and CAC ended the day lower by 2.13%, 1.20% and 1.88% respectively. Asian markets too have opened negatively. The SGX Nifty was seen trading lower by 48 points at 08:15 AM.

Clearly, the markets are going to be weighed down by global cues. The only support the markets can possibly have in the day is from RIL’s AGM. But overall, the markets are likely to see a negative opening today.