RTTNews - Wednesday, the Indian market may open lower, mirroring the negative Asian cues on the back of weak industrial output data from the U.S. FII flows are likely to influence market movement amid concerns about stretched valuations and a likely correction in the near-term surrounding the forthcoming budget.
For the second straight day, FIIs remained net sellers in Indian equities on Tuesday, as they sold shares worth Rs.728.51 crore on a net basis, according to provisional data released by the stock exchanges. On Monday, they sold shares worth Rs.213.30 crore. Trading may remain volatile on alternate bouts of buying and short-covering ahead of the expiry of June series derivatives contacts next week.
The major U.S. averages ended notably lower overnight following mixed economic data. While U.S. housing starts rose at a better-than-expected annual rate, lower industrial production on the back of a sharp drop in capacity utilization and a decline in core producer prices triggered fairly heavy selling.
A commerce department report showed that housing starts rose 17.2 percent to an annual rate of 532,000 units in May from the revised April estimate of 454,000. Economists had expected starts to rise to 485,000 from the 458,000 originally reported for the previous month.
Separately, the labor department revealed that producer prices rose 0.2 percent in May followed by a 0.3 percent increase for April and data released by the Federal Reserve revealed that industrial production fell by 1.1 percent in May following a revised 0.7 percent decrease in April. The Dow Jones Industrial Average closed down 1.25%, the Nasdaq Composite fell 1.11% and the S&P 500 index ended down 1.27%.
Meanwhile, the Indian ADRs closed mixed. Sterlite tumbled 3.63%, Wipro fell 3.51%, Reddy's Laboratories declined 2.62%, Infosys eased 1.91% and MTNL moved down 0.9%, but ICICI Bank edged up 0.57%, HDFC Bank rose 0.66% and Satyam Computers soared 13.95%.
Crude oil futures ended lower at $70.47 a barrel, down 0.21% in New York trading on Tuesday, weighed down by economic concerns and the dollar's bounce back from its lows. Profit taking ahead of the release of inventory reports by the U.S. Energy Administration Department on Wednesday also contributed to the weakness. Crude oil was last trading unchanged in Asian trading on Wednesday.
After touching an intra-day low of Rs.47.96 on concerns about portfolio capital outflows, the rupee recouped most of its loss and ended at Rs.47.74/75 against the dollar on Tuesday, down 4 paise from its previous close following a late recovery in the domestic stock market.
On Tuesday, the Indian market wiped out its early loss and ended modestly higher on the back of value buying and short covering after a 2% loss in the previous session. Banking, public sector, power and metal stocks led the gainers, but the oil & gas index ended in the red amid loss by market heavyweight Reliance Industries. After falling to as low as 14,621 during the day, the BSE Sensex bounced back sharply to end at 14,958, up 82 points or a modest 0.55% gain from its previous close. Likewise, the S&P CNX Nifty rose 34 points or 0.75% to 4,518, while the small-cap and the mid-cap indexes on the BSE ended up over 2% each. On the BSE, advancers outnumbered decliners by 1643 to 1006.
Reliance Industries(RIL) may rise amid reports about likely government intervention in the legal gas distribution dispute with RNRL. RIL is also likely to move the Supreme Court challenging the verdict of the Bombay High Court.
JSW Steel is reportedly eying export markets such as South America, Mexico and Chile through its U.S. subsidiary.
IFCI has sold 10.91 lakh shares of realty firm Maytas Infra for Rs 9.84 crore through the bulk deal route on the National Stock Exchange.
Realty stocks could be in focus after Urban Development Minister Jaipal Reddy favored cheaper loans for buying houses in the below Rs 5-lakh category. He also sought the extension of 7.5 percent interest scheme presently available for flats up to Rs. 20 lakh to those priced at Rs. 30 lakh in cities.
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