Front-month crude oil futures fell below the key $97/bbl support level on Thursday after comments by the top US official in charge of nuclear power regulation, indicating that the Japanese atomic crisis is worse than previously thought.
Wall Street closed at its lowest level in 2011 overnight on fears of a nuclear catastrophe in Japan. The worsening situation in Japan also dragged Asian markets lower in morning trade on Thursday
The Indian share market is likely to see a gap-down opening on negative cues from the global arena. Key indices in the US closed at the lowest levels in the year on Wednesday on fears of a nuclear catastrophe in Japan. Markets in Asia were down in early trade on Thursday on worries about the impact of the developments in Japan on the regional recovery and the political turmoil in West Asia and North Africa. The SGX Nifty was down 52.50 points at 5,476.50 over its previous close of 5,529.
The Reserve Bank of India (RBI) will announce its mid-quarter monetary policy review today, which will influence the market later in the day. It is widely believed that the central bank will hike key rates by 25 basis points to curb rising prices. The RBI has raised policy rates seven times since March 2010, with a hike of 175 basis points in short-term lending (repo) rate and 225 basis points in short-term borrowing (reverse) repo rate in its bid to arrest inflation. This apart, the food inflation numbers for the week ended 5th March will be announced around noon. Surging crude prices in the wake of the turmoil in West Asia are expected to impact food prices.
The recovery in the Asian stock markets boosted investor sentiments in India, leading to a higher opening yesterday. A surge in the advance tax payments for the fourth quarter also aided the gains. The indices touched their day's highs in post-noon trade. But news of the suicide of former telecom minister A Raja's aide Sadiq Batcha pressurised the market a bit in the last half an hour with the benchmarks paring some of the gains, but making a close in the green. The Sensex closed 191 points up at 18,359 while Nifty was up 62 points up at 5,511. The market is slowly turning up, ignoring the negatives.
Wall Street closed at its lowest level in 2011 on fears of a nuclear catastrophe in Japan and its impact on the supply chain. Losses mounted after the European Union’s commissioner for energy that the situation at one of Japan’s nuclear plants was “out of control”.
In economic news, data on housing starts showed the steepest monthly drop in nearly 27 years and new building permits set a record low. Groundbreaking on new construction dropped 22.5% last month to an annual rate of 479,000 units, slightly above a record low set in April 2009. Besides, wholesale prices surged in February on higher energy and food prices, but underlying producer prices increased only moderately.
The Dow tumbled 242.12 points (2.04%) at 11,613.30. The S&P 500 declined 24.99 points (1.95%) at 1,256.88 and the Nasdaq fell 50.51 points (1.89%) at 2,616.82. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, rose 21% to 29.40, the highest level since July.
Markets in Asia were in the negative zone in early trade on Thursday on concerns about Japan and on increasing geo-political turmoil in West Asia and North Africa. G-7 finance ministers and central bankers are expected to meet today to discuss support for disaster-stricken Japan, including the potential purchase of Japanese bonds. The surging yen to an all-time high against the dollar hurt export-related companies.
The Hang Seng tanked 1.74%, the Jakarta Composite declined 1.18%, the KLSE Composite fell by 0.37%, the Nikkei 225 tumbled 2.09%, the Straits Times was down 0.95%, the Seoul Composite fell by 0.60% and the Taiwan Weighted was 0.7% lower. Recovering from its lows, the Shanghai Composite was up 0.12% in early trade.
Back home, the Supreme Court on Wednesday directed the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) to go ahead and decide the plea of Aditya Birla group firm Idea Cellular against the Department of Telecom (DoT) to issue it third generation (3G) spectrum in Punjab where the allocation has been pending because of Idea’s merger with Spice Telecom.
The TDSAT had stopped hearing after the Attorney General had mentioned before the Tribunal that the Supreme Court had restrained all courts from passing any order on allocation of spectrum. Following that, Idea had approached the Supreme Court seeking its clarification on the issue.