Pre Session- Gap down opening seen for Sensex as global rally fizzles
19/02/2016
Indian equity benchmarks are tipped to open lower on Friday as caution returns to Dalal Street amidst a bearish trend in stock markets across Asia and a negative finish at Wall Street overnight as a drop in oil prices sapped risk taking appetite while investors resorted to profit taking after a stellar rally in recent sessions. Weakness in the CNX Nifty Index futures for February delivery which fell 0.31 per cent or by 22 points at 7,160 at 10:36 am Singapore time, signals that the Sensex may witness a weak opening today. Caution ahead of the start of the Budget Session of the Parliament next week may weigh on trading sentiment as investors await whether the NDA government gets the green light for key structural reform bills such as GST that remain stuck due to political headwinds. Meanwhile, the government is facing a tough challenge on the fiscal front with leading global financial services firms such as Goldman Sachs seeing the centre delaying its fiscal consolidation roadmap due to higher wages on account of the Seventh Pay Commission recommendations, and higher rural spending in a bid to buoy demand. Traders will continue to eye the movement of the rupee, which on Thursday tumbled to a fresh 30-month low of 68.58 per US dollar, in intraday trade, near a record low. Marking a second straight rally, the 30-share Sensex, on Thursday rallied by 267.35 points or by 1.14 per cent to end at 23,649.22 in line with a bullish global trend.
Asian stocks fell, trimming the biggest weekly rally since December 2011 as surging US oil supplies pushed down oil prices and dragged shares of energy companies lower, dimming the lure for risky assets. China’s Shanghai Composite was trading tad lower as a record stretch of declines in factory gate prices signaled prolonged weakness in the world’s second biggest economy. Hang Seng declined as the rally in the past few sessions paved way for profit booking by traders, at existing levels. Japan’s Nikkei 225 tumbled by over 2 years, paring the biggest weekly rally in six years, as a stronger yen eroded the appeal of exporter stocks. Wall Street snapped a three-day rally on Thursday as oil prices fell below USD 31 per barrel on ballooning US crude supplies, while a second straight drop in US leading index in January signaled concerns over the health of the world’s biggest economy. The Dow Jones Industrial Average fell 0.25 per cent; the Nasdaq Composite tumbled 1.03 per cent while S&P 500 fell 0.47 per cent.