Nifty futures, Asian indices down on nervous trades

Hong Kong: After last week’s severe battering, the Indian market is poised for another weak start, going by early morning trends on the Nifty futures market this morning.

As at 7.30 am IST, Nify futures are down in excess of four-tenths of 1 percent. Elsewhere in the Asia-Pacific region too, markets are giving up early morning gains, and in at least Hong Kong and Shanghai, are down in the red. That’s despite signs of a return of the risk-on trade, as reflected in a slight fall in the dollar index. The rupee will perhaps open marginally stronger.

[caption id=“attachment_315657” align=“alignleft” width=“300” caption=“Nify futures are down in excess of four-tenths of 1 percent. Reuters”]  [/caption]

Concerns over China’s economic health are beginning to mount, and ahead of manufacturing data due out tomorrow, the Greater China market is experiencing an undercurrent of weakness. In a policy speech over the weekend Chinese Premier Wen Jiabao warned of the risks of a sharp slowdown in the economy, and hinted at policy responses to shore up growth. Societe Generale’s always-bearish analyst Albert Edwards says the prospect of a “very hard landing” in China has increased

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Over the weekend, G8 leaders met to discuss the global economy, but beyond anodyne statement, there was nothing in it for the markets.

Back home, analysts take heart from Friday’s performance, driven by good corporate results, but arefretting about the rupee, which has been in free fall, and is becoming central to the restoration of investor confidence. But given that India is staring at a stagflation scenario, the severe impairment of its macro fundamentals, and the uncertainties that persist in the eurozone, that investor confidence isn’t about to be restored anytime soon.

For this morning, we’re likely to see a weaker start to trading.

That’s the market outlook on Monday, the 21st of May, from me Venky Vembu, in Hong Kong.