Hong Kong: Markets across Asia are in the red this morning, as yesterday's relief rally over the Greek election verdict has already given way to concerns about the debt crisis in Spain and Italy. Of course, sentiment in India is also weighed down by the RBI's non-move yesterday, and Fitch Ratings' lowering of its outlook on India's sovereign rating.
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As at 7.30 am IST, Nifty futures are trading absolutely flat, which in a perverse way makes them the outperformer this morning, given that most other indices in the Asia-Pacific region are in negative territory. But then, the Indian market had already given back the gains from the Greek relief rally early yesterday, after the RBI failed to meet market expectations of a rate cut. Markets took it rather badly, and they received a double-whammy late on Monday when Fitch weighed in.
Overnight, Wall Street had a downbeat day, with grim news out Spain swamping any positive sentiment from the Greek election verdict that saw pro-bailout parties set to form a government and effectively postponing Greece's problems. In any case, analysts are beginning to get sceptical about whether political developments in Greece mean anything at all, given the gravity of the debt crisis.
Back home, investor sentiment is distinctly down and out, given the avalanche of bad news both at home and abroad. Market participants are distressed by the RBI's hawkish stance on inflation, and its readiness to sacrifice growth in the short term. But as we've argued on Firstpost, it was a fundamentally sound decision, given that inflation hasn't been vanquished and the government hasn't kept up its end of the bargain in taming fiscal excesses.
Overall, we'll likely see a tame start to the trading day, but with overseas sentiment acting as a drag, markets don't have much of an upside.