Sensex, Nifty May See Cautious Start As Fed Worries Resurface

Indian shares look set to open on a cautious note Tuesday as investors react to an overnight climb in U.S. Treasury yields.

U.S. Treasury yields rose across the curve as a result of a heavy slate of corporate debt sales and a series of auctions beginning today.

The downside, if any, may remain capped after Fitch Ratings raised its mid-term potential growth estimate for India by 0.7 percentage points to 6.2 percent for 2019-2027.

Benchmark indexes Sensex and Nifty jumped around 0.9 percent each on Monday as weak U.S. jobs and service sector activity data added to optimism over dovish Fed bets. The rupee settled one paise lower at 83.21 against the dollar.

Asian markets were broadly lower this morning as investors awaited cues from Chinese trade data and a rate decision by the Reserve Bank of Australia.

The dollar was little changed and gold prices dipped after Minneapolis Fed President Neel Kashkari told Wall Street Journal that he would err on the side of overtightening monetary policy rather than not doing enough to bring inflation down to the 2 percent target.

Oil prices were down around half a percent in Asian trade after settling modestly higher on Monday as Russia and Saudi Arabia announced they would continue with additional voluntary supply cuts.

Overnight, U.S. stocks eked out modest gains after last week’s strong rally on hopes the Fed is done with its monetary tightening.

The tech-heavy Nasdaq Composite inched up 0.3 percent to notch seven days of gains for the first time since January while the Dow and the S&P 500 edged up 0.1 percent and 0.2 percent respectively to extend gains for a sixth day.

European stocks fell for the first time in five days on Monday ahead of a busy week of speeches by central bank officials.

The pan European STOXX 600 slipped 0.2 percent. The German DAX dropped 0.4 percent and France’s CAC 40 shed half a percent while the U.K.’s FTSE 100 finished marginally higher.