Nifty futures, Asian markets down; Spain bailout sours

Euphoria over Spanish bank bailouts gives way to a dose of reality - and worries about Greece ahead. And at home, we have one more drag on sentiment, in the form of the S&P threat of a rating downgrade.

Hong Kong: The mood of the markets can turn on a dime - or on a rupee. And trading in India yesterday - and all across Asia this morning - is an illustration of that.

Yesterday, markets in Asia started off on a euphoric note, after news of the 100 billion euro bailout of Spanish banks. The Indian market too joined in the relief rally, and was up by a healthy margin until an hour before close. That’s when rating agency Standard & Poor’s released a report that laid out its rationale for why India is at risk of a sovereign rating downgrade unless the government undertook reforms.The Indian market, and the rupee, promptly sank, as well they might.

This morning, across Asia, most markets are in retreat as the euphoria over Spain has dissipated in double-quick time. As we’d noted yesterday , the euphoria was entirely misplaced. Details of the Spanish bailout were delightfully vague, and in any case, there’s a big event risk - the Greek election - ahead later this week that the markets appeared to have overlooked.This morning, reality is catching up with the markets.

Listen to audio

As at 7.30 am IST, Nifty are down nearly three-tenths of 1 percent. But elsewhere across the region, most markets are in a deeper shade of red, in excess of 1 percent in most cases. Only Sydney, which was closed yesterday (and therefore missed out on yesterday’s rally) is playing catch-up, although the mood elsewhere is a bit of a dampener.

Overnight, Wall Street had a rotten day, sinking all the way from start to finish as the Spain deal began visibly to unravel and investors began to focus on the Greek elections.

Back home, the hangover from yesterday’s S&P shock continues into today, and the market will likely open weaker this morning. Given the undercurrent of nervousness about Spanish and Italian bond yields, and the generally downbeat sentiment in overseas market, there aren’t many upside triggers to the market either.

It’s probably going to be one of those eminently forgettable days in the market.

Written by Vembu

Venky Vembu attained his first Fifteen Minutes of Fame in 1984, on the threshold of his career, when paparazzi pictures of him with Maneka Gandhi were splashed in the world media under the mischievous tag ‘International Affairs’. But that’s a story he’s saving up for his memoirs… Over 25 years, Venky worked in The Indian Express, Frontline newsmagazine, Outlook Money and DNA, before joining FirstPost ahead of its launch. Additionally, he has been published, at various times, in, among other publications, The Times of India, Hindustan Times, Outlook, and Outlook Traveller. see more