RTTNews - With Wall Street closing weak on Friday hurt by disappointing economic data and the Asian markets seeing an across-the-board sell-off this morning, the Indian market is likely to make a gap-down opening Monday. Not withstanding a recovery witnessed last week, investor sentiment is likely to remain jittery due to concerns about a weak monsoon and its impact on GDP growth.
On Wall Street, the major U.S. averages shed around 1% each on Friday following the release of Reuters and the University of Michigan's preliminary report on consumer sentiment for the month of August, which showed that the consumer sentiment index unexpectedly decreased compared to the previous month. Coupled with disappointing retail sales figures released earlier in the week, the data indicated that the American consumer is still struggling, prompting the pullback by stocks.
However, data released later showed that U.S. industry ramped up production in July for the first time in nine months, led by auto makers on the back of the government's cash for clunkers program, which provides incentives to buy new cars.
Separately, government reports showed that Hong Kong's economy emerged out of a year- long recession as it grew 3.3% in the three months to June after falling in four consecutive quarters. Official data from Japan for the June quarter also indicated that the country is now out of its recession, having recorded a 0.9 percent growth over March quarter, but the growth fell short of expectations.
Back home, addressing the nation on the eve of Independence Day, Prime Minister Manmohan Singh asserted that India will return to its 9 percent growth path despite the global economic crisis. It is only due to our policies that the global crisis has affected us to a lesser extent than many other countries, he said and added that there will be an improvement in the situation by the end of this year. He also spoke about achieving a 4 percent annual growth in agriculture in five years.
With the monsoon deficit widening, PM's Economic Advisory Council chairman C Rangarajan said that the domestic economy is likely to grow between 6 percent and 6.5 percent in the current fiscal year as against 6.7 percent in the previous fiscal year.
Meanwhile, net FII investment in Indian equities is a meager Rs.264 crore in August compared to nearly Rs. 2,200 crore invested in debt market, data released by market regulator SEBI showed.
Crude oil futures posted their biggest loss in more than two weeks on Friday amid energy demand concerns after a disappointing consumer sentiment report in the U.S. darkened the economic outlook.
After declining to $67.51 per barrel, down $3.01 in New York trading on Friday, crude oil fell further to $66.94 a dollar in Asian trading on Monday.
Last week, after sliding in 3 out of 5 trading sessions, the benchmark BSE Sensex ended up 251 points or 1.66%, helped by a rally on Thursday on the back of robust manufacturing growth, the unveiling of a new Direct Tax Code by the finance minister and optimistic comments from the U.S. Federal Reserve on the world's largest economy. The S&P CNX Nifty rose 2.20% and the BSE small-cap and mid-cap indexes rose over 3% each for the week, outperforming large-caps.
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