Indian shares are seen opening lower on Friday, mirroring weak Asian cues as an unexpected rate cut from China stoked concerns that the nation's economic growth will probably slip below 8 percent in the second quarter.
Also weighing on sentiment, Federal Reserve Chairman Ben Bernanke didn't signal any imminent action, although he stated that the Fed would intervene if financial conditions worsen. In news from Europe, Fitch cut Spain's credit rating by three notches to 'BBB' with a negative outlook, citing ballooning estimates of the cost of a banking crisis and a lengthening recession.
Having said that, stocks may recover from early losses, as a more than 2 percent drop in crude prices in Asian trading Friday, renewed FII buying and the recent strength in the rupee all augur well for the Indian economy and markets. Especially, the continuous fall in crude prices accompanied by a stronger rupee will make the RBI's job easier, when it meets to review its mid-quarter monetary policy on June 18.
Indian shares extended recent gains to reach a one-month high on Thursday, as the rupee's strength on talk of the government giving a big push to infrastructure development and positive global cues on continued hopes of stimulus measures from major central banks underpinned sentiment.
Extending gains for the fourth consecutive session, the benchmark BSE Sensex ended the day up 195 points or 1.18 percent to 16,649, while the broader Nifty index rose by 53 points or 1.05 percent to 5,050.
Provisional data released by BSE shows that foreign institutional investors remained net buyers in Indian equities and bought shares worth Rs.675.4 crore yesterday, while domestic financial institutions offloaded shares worth 33.74 crore.
Corporate News
Elecon Engineering said it secured a letter of intent from IFFCO for supply, erection & commissioning of rail-mounted full portal type scraper reclaimer aggregating to Rs. 16.30 crores
Jenson & Nicholson (India) has clarified to BSE that the increase in price of shares of the company during last 2-3 days may be as a consequence of general upsurge in market sentiment.
Drug firm Cipla reported 17.03 percent increase in net profit to Rs. 11239.60 million for the year ended March. Additionally, the company stated that it has lost an appeal in a U.S. court over a patent case against Merial, a unit of French giant Sanofi, regarding an animal healthcare product.
Asian Markets
Asian markets are declining across the board, with Japan's Nikkei pacing the declines with a 2 percent loss, while China's Shanghai Composite is down a modest 0.1 percent, Australia's All Ordinaries index is declining 0.9 percent, Hong Kong's Hang Seng index is down 0.4 percent and South Korea's Kospi average is down 0.4 percent.
U.S. And European Markets
U.S. stocks closed on a mixed note after seeing early strength overnight, as Federal Reserve Chairman Ben Bernanke made no explicit reference to further easing measures. In his testimony before the Joint Economic Committee in Washington, Bernanke said that U.S. economic growth appears poised to continue at a moderate pace and suggested that last week's disappointing jobs report may have reflected temporary factors.
The initial strength on Wall Street was partly due to a positive reaction to news of a surprise interest rate cut by China's central bank, although the rate cut signaled the impending release of some dismal economic data. The Dow rose 0.4 percent, while the tech-heavy Nasdaq fell half a percent and the S&P 500 edged down 0.14 points or less than a tenth of a percent.
The major European averages such as France's CAC 40, the German DAX and the U.K.'s FTSE 100 rose between 0.4 percent and 1.2 percent, with sentiment boosted by a well-received Spanish bond auction, a better-than-expected report on U.S. jobless claims and China's decision to cut interest rates.
Crude
Crude oil futures for July delivery pared gains to end down 0.2 percent at $84.82 a barrel on the New York Mercantile Exchange, weighed down by worries about the fragile U.S. economic recovery. Oil prices rallied to as high as $87.03 earlier in the session after China announced an unexpected cut in lending rates to stimulate growth.
by RTT Staff Writer
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