Sensex, Nifty To Open Lower As Fed Worries Return To Haunt

Indian shares are likely to open on a subdued note Monday as a bigger than expected increase in the U.S. producer price index stoked concerns that the Federal Reserve might keep interest rates higher for longer.

Meanwhile, India’s industrial production grew 3.7 percent from a year ago in June, hitting a three-month low and slower than the 5.3 percent expansion in May, data from the National Statistical Office revealed.

FII flows, stock-specific movements due to MSCI index rejig, wholesale and retail inflation readings for July, rupee movement and the direction of oil prices may sway sentiment as the holiday-shortened week progresses.

Indian stock markets would remain closed on Tuesday for Independence Day.

On the earnings front, Hindustan Copper and ITC would announce their earnings this week.

Asian markets fell in cautious trade this morning as Chinese deflation worries persisted and geopolitical tensions escalated in the Black Sea.

Hong Kong’s Hang Seng index futures traded below the 19,000 mark for the first time in almost a month on concerns over China’s worsening property slump.

Gold held near five-week lows as the dollar strengthened due to elevated Treasury yields. Oil prices slipped on China demand concerns.

U.S. stocks ended narrowly mixed on Friday and Treasury yields rose after data showed producer prices rose more than expected in July while consumer confidence dropped for the first time in 14 months, raising much uncertainty about the outlook for inflation and interest rates.

The producer price index rose 0.3 percent from the previous month following a revised unchanged reading in June and expectations for a reading of 0.2 percent.

The annual rate of producer price growth reaccelerated to 0.8 percent from just 0.2 percent in June, as cost of services increased.

The tech-heavy Nasdaq Composite gave up 0.6 percent to reach its lowest closing level in well over a month and the S&P inched down 0.1 percent while the Dow rose 0.3 percent.

European stocks fell sharply on Friday, as China growth concerns and anxiety about the outlook for U.S. interest rates overshadowed better-than-expected U.K. growth data.

The pan European STOXX 600 fell 1.1 percent. The German DAX lost 1 percent, France’s CAC 40 shed 1.3 percent and the U.K.’s FTSE 100 declined 1.2 percent.