Markets in the US continued their rally brushing aside the Chinese rate hike and mixed corporate earning reports
The local market is likely to witness a subdued opening, tracking its Asian peers, which were trading mostly lower following a rate hike by the Chinese central bank, post market close yesterday. On the other hand, Wall Street continued its rally with the Dow closing at the highest level since June 2008. The SGX Nifty was down 20 points at 5,300 compared to its previous close of 5,320.
As suggested on Friday, a new downturn has started. Yesterday, the Sensex and Nifty opened higher at 18,142 and 5,432 respectively. This was the day's high and soon the market slipped below yesterday's closing. Thereafter it fell below yesterday's low and also below Friday's low. After 2.30PM, the market began to weaken suddenly and the Sensex and Nifty hit a new low point since July 2010-hitting 17,742 and 5,303 respectively during the day. The Sensex declined 261 points to 17,776 and the Nifty fell 83 points at 5,313.
Markets in the US continued their rally brushing aside the Chinese rate hike and mixed corporate earning reports. While McDonald’s Corporation gained 2.6% after sales beat analysts’ expectations, Teva Pharmaceutical Industries declined 5.4% and Avon Products Incorporated fell 3% on lower earnings reports. Mergers also made news as Kindred Healthcare announced the acquisition of RehabCare Group Incorporated to create a post-acute healthcare services company.
The Dow surged 71.52 points (0.59%) at 12,233.15. It was the seventh straight increase and the longest win streak since one that ended in July 2010.The S&P 500 added 5.52 points (0.42%) at 1,324.57, the highest close since 19 June 2008. The Nasdaq rose 13.06 points (0.47%) at 2,797.05. This was the index’s highest close since 6 November 2007.
Most markets in Asia were lower in early trade following the rate hike announced by the Chinese central bank on Tuesday. Material related stocks were under pressure on indications that rising material prices would impact their bottomlines, going ahead.
China raised interest rates for the third time since mid-October. The benchmark one-year lending rate has been increased to 6.06% from 5.81%, effective Wednesday. The one-year deposit rate will rise to 3% from 2.75%.
The Jakarta Composite was down 0.74%, the KLSE Composite fell 0.14%, the Straits Times declined 0.76%, the Seoul Composite lost 0.44% and the Taiwan Weighted shed 0.10%. On the other hand, the Shanghai Composite was up 0.01% and the Nikkei 225 rose 0.22%.
Back home, terming concerns expressed by some quarters over governance-deficit, tight liquidity and inflation in the country as “alarmist and highly-exaggerated”, managing director of HDFC Bank, Aditya Puri said that India is well-poised to achieve 8%-9% economic growth per annum over the next few years.
“Some say there is a governance-deficit in India—I think it is too strong a word. There have been some lapses but on the whole, things have been good. To paint the whole nation as suffering from a governance-deficit, is, in my opinion, too harsh,” Mr Puri, said on Tuesday.