Hong Kong: Yesterday, Indian investors set themselves up for a big disappointment after the much-anticipated big bang reform effort from the government failed to materialise. The markets sold off on the news, to end the day in the red.
This morning, markets appear to have shrugged off the let-down, and are perking up just a bit in early trades. As at 7.30 am IST, Nifty futures are trading up by about two-tenths of 1 percent, relatively outperforming most of the other indices int he Asia-Pacific region.
Hong Kong’s Hang Seng Index is up by a similar margin on volatile early trades, but elsewhere across the region, indices are generally weak. What’s weighing down sentiment is renewed fear over the eurozone crisis, with a string of downbeat news stoking these fears.
Rating agency Moody’s set off another round of panic by downgrading ratings on 28 Spanish banks, which were already tottering on the edge. Greece‘s newly appointed finance minister resigned on health grounds. And Cyprus became the fifth eurozone economy to line up for a bailout. Clearly, the debt contagion is still spreading, and faith that European leaders will do whatever it takes – at the European summit later this week – to save the day stands on slippery ground.
Overnight, Wall Street tumbled hard, with all three leading indices finishing deeply in negative territory. The tech-heavy Nasdaq fell the hardest, ending down nearly 2 percent.
Back home, however, analysts are still betting on reforms to lift up investor sentiment. But any meaningful upside trigger may come only after this week’s event risk – the European summit – passes.
The US dollar is a tad weaker this morning, which should help the rupee recover some ground.
But otherwise, it looks like a tame start to the trading day, given the negative investor sentiment, both at home and abroad.