Hong Kong: The Indian market is poised for a tame start to the trading week, given the early trades on the Nifty futures, and some mixed cues from Asian markets that are themselves looking for direction.
As at 7.30 am IST, Nifty futures are trading slightly to the downside, of the order of about one-tenths of 1 percent in the absence of strong signals one way or another from overseas markets.
Indices elsewhere in the region are fairly mixed, and range-bound on fairly thin volumes. Most of them, with the exception of Shanghai, are up a tad, but there’s really no juice in the market. Wall Street will be closed on Monday for the Memorial Day Holiday, so investors are sitting it out until they can get a sense of direction. GDP data due out later this week- from both China and India – could give that sense of direction.
Back in India, analysts are urging caution ahead of the expiry of derivative contracts – and the prospect that GDP data due out on Thursday will likely disappoint. In their estimation, the bear market hasn’t quite bottomed out, and with so much uncertainty hovering over the eurozone, it’s going to get worse before it gets any better. Foreign institutional investors have been voting with their feet: thus far in May, they’ve pulled out Rs 435 crore which is about half as much as they took out in April, but nevertheless reflects a loss of faith in the Indian market.
The rupee could get a brief respite this morning, given that the dollar index reflects a bit less of the risk aversion sentiment that we’ve seen in recent times. Finance Minister Pranab Mukherjee has been talking up reforms: he claims he is looking to build a political consensus on allowing FDI in retail, which was aborted last year under pressure from allies and the Opposition.
The government is also said to be considering establishing an economic advisory team to chart out some policy initiatives. But precisely how that will hep is unclear. It’s not like the government doesn’t know what needs to be done: the problem arises because it has thus far lacked the political will to see through the measures it knows it has to implement.
All things considered, we’re likely in for a pretty tame start to the week.