Market May Continue To Remain Under Pressure

A benchmark index of Indian equities markets ended flat after earlier hitting their lowest levels in 1-1/2 months on start of the week as decline in shares of IT and consumer durable companies. Investors were also cautious due to lower IIP data along with weak global markets and falling international crude oil prices. The Sensex ended fall 31.12 points i.e. 0.11% at 27,319.56 and the Nifty closed down 4.5 points i.e. 0.05% at 8,219.60. The broader markets underperformed benchmarks with the BSE Midcap and Smallcap indices lost 0.5% and 0.6%, respectively.

Wholesale inflation disappeared in November, meaning overall prices didn’t rise from their level a year ago with the industry department reporting zero inflation rate for the month. In October, WPI inflation was 1.77%.

Globally, the U.S. stock market down broadly on yesterday due to continue falling oil prices, extending losses into a second week.  Dow Jones Industrial Average jumped more than 100 points shortly after the market open but ended 100 points (0.6%), lower at 17,180.84. The S&P 500 traded in a 29 point range, but ended 12.60 points (0.6%) lower at 1,989.63. The Nasdaq composite index tumbled 48.44 points (1%), to 4605.16. The Federal Reserve begins a two day meeting from today and investors will be watching its policy statement for any clues on the timing of future interest rate hikes.

While oil prices continue their steady decline, Benchmark U.S. crude fell USD 1.90 (3.3%), to close at USD 55.91 a barrel on the New York Mercantile Exchange. Oil was as high as USD 107 a barrel in June. The drop in crude prices has hurt Russia since the country is a major oil exporter and depends heavily on oil for tax revenue.

European stocks market also fell, and the Russian ruble plunged to a record low against the dollar as the continuing collapse in the price of oil reverberated through global financial markets. The ruble sank 13% to 65.83 to the dollar. The Russian currency has lost about half of its value against the dollar since the beginning of the year. Therefore, Russia's central bank, in a bid to stem a sharp decline of the ruble, raised its key interest rate Tuesday to 17% from 10.5%. It also is raising its repo rate to 18% from 11.5%.

European stocks turned sharply lower Monday, with energy shares back in the red along with oil prices. The Stoxx Europe 600 SXXP fell 2.2% to 323.29.Germany’s DAX 30 DAX fell 2.7% to 9,334.01, France’s CAC 40 lost 2.5% at 4,006.53 and the U.K’s FTSE 100 ended 1.9% lower at 6,182.72.

Asian markets open in red, extending a selloff in emerging markets, a rate rise by Russia; falling oil prices and China factory data falls to seven month low sent Asia markets lower. The Topix slipped 1.65% to 1,356.62 and the Nikkei 225 decreased 1.94% to 16,768.50. Hong Kong’s Hang Seng fell 1% percent to 22,805.74. The flash HSBC/Markit manufacturing PMI fell to 49.5 in December from November's final reading of 50.0 and well below the 50.0 reading forecast by analysts. A reading below 50 indicates contraction, while one above 50 points to expansion on a monthly basis.

The SGX Nifty is also open in red with decline of 60.4 points. Today Indian market is likely to open on negative note due to weak global investor sentiment, trigged by a sharp fall in crude oil prices.