RTTNews - The Indian market is set to make a gap-down opening on Thursday after weaker-than-expected U.S. April retails sales dealt a severe blow to expectations of an economic revival and sent stock prices crashing down sharply on Wall Street overnight. Currently, markets across the Asia-Pacific region are also trading sharply lower.
Besides global cues, uncertainty ahead of the announcement of results of the month-long national elections, which will be announced on Saturday, may add to the selling pressure.
Various exit polls released on Wednesday evening showed that the ruling UPA coalition was ahead, although without a majority.
That said, the market might find some support on account of fund buying. Data released by the Bombay Stock Exchange showed that foreign institutional investors have invested a whopping Rs.4, 106.96 crore on a net basis on Wednesday, the biggest in a single day thus far this year. While domestic financial institutions also made net investments of Rs.105.73 crore on Wednesday, brokers, on the behalf of their clients, sold shares worth Rs.3, 868 crore and proprietors and non-resident Indians sold shares worth Rs.45 crore and Rs.1.65 crore respectively.
Stocks on Wall Street saw substantial weakness during trading on Wednesday, as disappointing retail sales offset some of the recent optimism about the outlook for the economy. The major averages closed firmly negative, with the Nasdaq ending the session at its worst level of the day. The Dow Jones Industrial Average fell 2.18%, the Nasdaq Composite tumbled 3.01% and the S&P 500 index moved down 2.69%.
A report from the Commerce Department showed that retail sales unexpectedly fell 0.4 percent in April following a revised 1.3 percent decrease in March. Economists had expected sales to come in unchanged compared to the 1.2 percent decrease originally reported for the previous month. A separate report from the Commerce Department showed a continued decrease in business inventories in the month of March. The report showed that business inventories fell 1.0 percent in March following a revised 1.4 percent decrease in February.
Meanwhile, the Indian ADRs closed sharply lower across the board. ICICI Bank plunged 6.71%, Sterlite Industries plummeted 6.03%, HDFC Bank slumped 6.23%, Infosys tumbled 4.68%, Satyam fell 4.28%, Wipro declined 3.99% and Reddy's Laboratories moved down 3%, but MTNL bucked the declining trend with a modest 1.4% gain.
Crude oil price settled lower at $58.02 a barrel, down 83 cents in New York trading on Wednesday, as worse than expected U.S. retail sales data and gloom on Wall Street more than outweighed the impact of a government report showing a surprise drop in U.S. crude and gasoline stockpiles. A report from the U.S. Energy Information Administration showed that U.S. crude inventories fell by 4.7 million barrels; defying expectations for a 10th straight weekly build. In Asian trading on Thursday, crude oil extended its loss and was last trading at $57.68 a barrel, down 0.59%.
The rupee settled weaker at Rs.49.71/72 against the dollar, down 0.9% from its previous close on Wednesday on concerns about a hung parliament affecting foreign capital inflows.
The Indian market ended a volatile session sharply lower on Wednesday, as investors took profits after a 4% rally in the previous session. Additionally, political uncertainty ahead of the announcement of results of the month-long general elections, which will be announced on Saturday, led to the sell-off. The BSE Sensex finished the session at 12,019, down 138 points or 1.14% from the previous close and the S&P CNX Nifty fell 46 points or 1.25% to 3,635. While metal, IT and FMCG stocks bore the brunt of the selling pressure, consumer durable, healthcare and auto stocks showed modest losses compared to the broader market.
DLF could remain in the spotlight amid reports that it is looking to raise Rs.10, 000 crore in the next 2-3 years through sale of its assets and its portfolio of investments. Media reports also suggest that the company is selling its 66% stake in Hindoostan Spinning and Weaving Mill in central Mumbai to a Chennai-based entrepreneur for Rs.310 crore
Max India could move ahead of its board meeting on Friday to decide on a preferential allotment of shares to International Finance Corporation, the private sector investment arm of World Bank.
State Bank of India could be in focus after the bank slashed its deposit rates across various maturities by up to 50 basis points.
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