Sensex, Nifty Set For Subdued Start On US Rate Hike Worries

Indian shares may open flat to slightly lower on Monday amid U.S. rate hike worries and caution ahead of a three-day policy meeting of the RBI’s monetary policy committee that gets underway later today.

The Indian central bank is expected to raise rates by 25 basis points despite signs of softening retail inflation.

The Adani crisis will continue to dent sentiment, with Credit Suisse, Citigroup and Standard Chartered all stopping accepting Adani bonds as collateral on marginal loans amid allegations of fraud from U.S.-based Hindenburg Research.

Finance Minister Nirmala Sitharaman on Saturday said that regulators are independent of the government… and they are left to themselves to do what is appropriate for keeping the markets regulated in prime condition.

“Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. Banks are also in compliance with the Large Exposure Framework guidelines issued by the RBI,” the RBI said in a statement.

Asian markets traded mixed this morning, with Chinese and Hong Kong stocks leading regional declines as diplomatic tensions increased between the U.S. and China.

The dollar extended its rally and yields continued to spike, while oil and gold prices were slightly higher in Asian trading.

U.S. stocks fell on Friday and bond yields climbed as a blockbuster jobs report revived worries about the interest-rate outlook.

Non-farm payroll employment soared by 517,000 jobs in January while economists had expected an increase of 185,000 jobs. The jobless rate slipped to a multi-decade low of 3.4 percent from 3.5 percent.

Meanwhile, earnings from mega tech companies showing softening sales growth offset upbeat service sector data.

The Dow eased 0.4 percent, while the S&P 500 lost 1 percent and the tech-heavy Nasdaq Composite tumbled 1.6 percent after posting strong gains during the previous three straight sessions.

European stocks ended Friday’s session broadly higher, led by gains in healthcare and energy stocks.

The pan European STOXX 600 rose 0.3 percent. The German DAX slid 0.2 percent, while France’s CAC 40 index gained 0.9 percent and the U.K.’s FTSE 100 added 1 percent.