Sensex, Nifty Likely To See Gap-down Opening On Fed Worries

Indian shares are seen opening sharply lower on Monday after last week’s Federal Reserve’s policy meeting raised more questions than it answered.

The upcoming 44th Annual General Meeting (AGM) of Reliance Industries Limited, the progress of monsoon rains, news flow about the central government’s new policy for COVID-19 vaccination in the country and the scheduled derivatives expiry of June month contracts may sway sentiment as the week progresses.

Asian stocks tumbled this morning and the dollar held near multi-month highs against other major currencies as traders brought forward expectations for when the Federal Reserve will start tapering its asset purchases.

Japan’s Nikkei index fell more than 3 percent to drop below 28,000 for the first time in a month, while benchmark indexes in Australia and South Korea were down more than 1 percent.

Gold rebounded from six sessions of losses, but still held near the lowest since early May amid dollar strength. Crude oil prices extended gains for a second day after reports that producer group OPEC expects limited U.S. oil output growth this year.

U.S. stocks fell sharply on Friday as St. Louis Federal Reserve President Jim Bullard offered a fresh dose of hawkishness, saying he sees an initial interest rate increase happening in 2022.

The Dow fell 1.6 percent to extend losses for the fifth day running and reach its lowest closing level in over two months, while the S&P 500 tumbled 1.3 percent while the tech-heavy Nasdaq Composite shed 0.9 percent.

European stocks tumbled on Friday, with a hawkish policy outlook from the U.S. Federal Reserve and signs of policy tightening in China weighing on markets.

The pan European Stoxx 600 lost 1.6 percent. The German DAX gave up 1.8 percent, France’s CAC 40 index declined 1.5 percent and the U.K.’s FTSE 100 fell 1.9 percent.

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