RTTNews - With Wall Street closing little changed overnight, the Indian market may see consolidation at current levels after three sessions of successive gains.
After closing notably higher across the board on Monday, the Asian markets are currently trading lower with traders indulging in some profit taking after recent gains. China's Shanghai Composite index is losing as much as 3.5%, led by commodities suppliers and banks.
Meanwhile, trading could be marked by a high degree of volatility, as traders await key U.S. economic data due later in the week and the settlement of current month options and futures contracts on Thursday.
On Monday, foreign institutional investors (FIIs) remained net buyers of Indian equities for the second day in a row, buying shares worth Rs.711.54 crore on a net basis, provisional data released by the BSE showed. According to market regulator SEBI, net purchases by FIIs totaled Rs.546.20 crore on Friday.
On the economic front, India's fiscal deficit year will not exceed 6.8 per cent this year despite the drought-like situation in the country, Planning Commission Deputy Chairperson Montek Singh Ahluwalia said on Monday. Prime Minister Manmohan Singh has called a meeting of the full Planning Commission on September 1 to assess the present state of the economy and energy issue.
On Wall Street, the major averages closed on opposite sides of the unchanged mark on Monday, as traders reacted to comments from noted economist Nouriel Roubini about a possible double recession. A sharp gain in U.S. Treasury debt prices, which drove benchmark yields lower, also weighed on stocks.
In an article for the Financial Times, Roubini, who predicted the magnitude of the recent financial crisis, stated that the global economy might bottom out in the second half of the year and that the economies in the U.S and other European countries might witness anemic or below trend growth for at least a couple of years. While the Nasdaq and the S&P 500 closed modestly lower, the Dow ended the day up about 3 points after rising as much as 80 points in early trading.
The Indian ADRs closed mostly lower. HDFC Bank fell 1.94%, Satyam Computers eased 0.56%, Wipro gave off 0.32%, MTNL moved down 0.25%, Reddy's Laboratories slipped 0.12% and ICICI Bank edged down 0.06%, but Infosys edged up 0.26% and Sterlite Industries rose 0.69%.
Crude oil edged higher on Monday amid hopes that a global economic recovery will boost energy demand. Oil hit a 10-month intra-day high before paring some gains to finish at $74.37 a barrel, up 48 cents or 0.65 percent on the session.
The rupee ended modestly higher at Rs.48.62/63 against the dollar, up 9 paise but off the day's high of Rs.48.38 on Monday. While strong equity markets across Asia boosted hopes of portfolio inflows, month-end dollar demand from importers restricted big gains.
On Monday, strong overseas cues following surprisingly good U.S. home sales data and reassuring comments from the U.S. Federal Reserve helped the Indian market end sharply higher, with realty, consumer durable, FMCG, capital goods and metal stocks leading the rally. The benchmark BSE Sensex finished at 5,629, up 388 points or 2.55% from its previous close, the S&P CNX Nifty climbed 2.52% to 4,643, the BSE mid-cap index rose 2.61% and the small-cap index added 2.83%.
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