More blood on the street: Markets down everywhere

Hong Kong: Another brutal day lies ahead for the Indian market, continuing on yesterday’s sharp losses, early trading trends on overseas markets show.

The bad news on the domestic political economic front in India, arising from the Assembly election results yesterday, which effectively cramps the space for economic reforms, is compounded by revived fears of a Greek default.

Wall Street freaked out overnight, with the Dow Jones index losing over 200 points - that’s nearly 1.6 percent. Eurozone economies are also contracting, and markets everywhere are seriously concerned.

This morning, as at 7.30 am IST, indices across the Asia-Pacific region are down sharply. Tokyo’s Nikkei is down nearly six-tenths of 1 percent, and so is the Shanghai index; Sydney’s S&P ASX is down by nearly 1 percent; Hong Kong’s Hang Seng is down in excess of 1 percent.

Nifty futures too are reflecting this downbeat sentiment everywhere, and are down nearly seven-tenths of 1 percent. Expect a sharp fall at start of trade today.

The outcome of the Assembly elections represents the sum of all fears for the markets. It confirms the political isolation of the Congress, and its increasing reliance on recalcitrant allies, which effectively kills any feeble initiative it may have to initiate meaningful reforms. The rise of the Samajwadi Party in Uttar Pradesh, and the fact that it doesn’t rely on support from the Congress, too is seen as a market downer going by the experience of strong State-level leaders who have checkmated the Centre on, for instance, the FDI in retail.

Analysts are also wary that the UPA government may reflexively resort to a populist budget, which could end up accentuating the problems on the fiscal front. They reckon that market volatility will remain high at least until the Budget.

Taken together, today could be another day of horrors in the market.