Concerns about the pace of the economic recovery roiled markets worldwide
The Indian market is likely to see a cautious opening as concerns about the economic recovery spooked markets worldwide. Markets in the US closed lower for the third straight day on Wednesday on concerns about the pace of the economic recovery and falling commodity prices along with weak sentiments from the US led to a lower opening for the Asian markets on Thursday. The SGX Nifty was down 32 points at 5,504 compared to its previous close of 5,536.
The Sensex and Nifty opened with small positive gains on Wednesday but quickly slipped into the red to hit their intra-day lows of 18,340 and 5,503, respectively. However, in the post-noon period, the indices inched to intra-day highs at 18,604 and 5,579. But the gains were short-lived and the market slipped into the red in the last hour. The Sensex declined 65 points to close at 18,469 and the Nifty fell 28 points to close at 5,537.
On 24 March 2011, the Nifty had closed at 5,522, from where it took nine trading days to hit an intra-day high of 5,944 on 6 April 2011 and closed at 5,892. The total gains of 369 points of the nine trading sessions have been wiped off to the extent of a 355 point drop in the subsequent 17 trading sessions (including yesterday’s fall of 28 points on the Nifty).
If the lows hold, the market can rally up to 5,650 on short-covering, before the decline resumes. The chances of a rally on Thursday are bright, given historical evidence. Since 1990, the market has been negative for eight consecutive days on 16 occasions (excluding the current fall). Out these 16 times, it has turned positive on the ninth trading day on 11 occasions, while on the other five it remained negative.
Wall Street closed lower on Wednesday on dour economic data. The Institute for Supply Management’s (ISM) index of non-manufacturing companies declined to 52.8 in April from 57.3 in March, lower than analysts’ forecast for a gain to 57.5. The ADP Employer Services reported that employment at US companies increased by lower-than-expected 179,000 in April. Besides, A gauge of new orders dropped by the most since record-keeping began in 1997.
In the earnings space, Las Vegas Sands plunged 7.3% after missing analysts’ earnings and revenue estimates and Kellogg fell 1.7% after the food manufacturer’s first-quarter earnings fell more than expected.
The Dow declined 83.93 points (0.66%) to 12,723.58. The S&P 500 shed 9.30 points (0.69%) to 1,347.32 and the Nasdaq fell by 13.39 points (0.47%) to 2,828.23.
Markets in Asia were lower in early trade on Thursday on concerns about rising prices that cast a shadow on the economic recovery in the region. Investors will keep an eye on the European Central Bank, which is expected to its decision on interest rates.
The Shanghai Composite declined 0.43%, the Hang Seng fell by 0.38%, the Jakarta Composite was down 0.52%, the KSLE Composite retraced 0.24% and the Straits Times shed 0.10%. Bucking the trend, the Taiwan Weighted gained 0.44%. Markets in South Korea and Japan are closed for a public holiday.
Back home, the civil aviation ministry on Wednesday held talks with the agitating Air India pilots to find a way to end the eight-day deadlock soon.
Sources said a two-member team of the ministry, headed by joint secretary Prashant Shukul, has been set up to have talks with the pilots, who are understood to have objected to hold parleys with Air India CMD Arvind Jadhav. The agitators had responded positively to some “feelers” sent by the ministry and the management since Tuesday night, they said.