Gut Checks For Today’s Opening

US stocks ended the day lower by 1%, German by 1%, Greek by more than 4%, Japanese by 1.5%, Turkey is to intervene in foreign exchange operations to support the Lira and the rupee is at record lows. Need we say how the markets are expected to be today?

The Bank of Japan yesterday decided to stay put on its policies. It kept unchanged its asset-buying and other policy elements, largely disappointing global markets. Investors were hoping for the central bank to extend its low-price fund supply operation. The yen rose sharply against the dollar and sent equities spiralling downwards.

The inaction of the BoJ resulted in American and European equities falling by more than 1%. The opening on Asia is highly negative as well. The Nikkei, Hang Seng, Shanghai and Singapore are trading lower by 1.75%, 1.20%, 1.39% and 0.33% respectively.

Domestically, the depreciation in the rupee has been causing a scare in the markets. After hitting a record-low of 58.98 to the dollar, it closed yesterday at 58.39. The rupee scare hence continues to hover over the markets.

Apart from tracking global cues and being depressed over the movement of the rupee, the markets would also be keeping a keen eye on IIP and CPI data scheduled to be released later today. These are key indicators that the markets would be watching as they will also give investors clues about the RBI’s prospective decisions on interest rates.

Markets today are expected to see a lower opening because of weakness in global equity markets. Moreover, there will be increased volatility and choppy trading ahead of the release of key domestic macroeconomic data. Although this data has the potential to overpower global cues and change the directional trend on the bourses, the markets will remain in a subdued state till the release of this data.