Indian shares open lower tracking subdued global markets

Mumbai: Indian equity benchmarks Sensex and Nifty started on a negative note on Monday in line with tepid global markets as investors remained cautious over yet another massive lift in Fed interest rate in next policy decision.

The BSE gauge Sensex was down 82 points or 0.14 percent to trade at 58,306 in opening deals and the broader NSE Nifty was lower by 22 points or 0.12 percent at 17,376 in early trade.

The Sensex was dragged lower by SBI, ICICI Bank, Infosys, Nestle and Tech Mahindra – shedding as much as 3 percent.

"A paradox in the economy-market connect is that good news on the economy can turn out to be bad news for markets. This is playing out now. The July US jobs data came in at a robust 5,80,000 against the poll of 2,50,000. This indicates a strong economy nowhere near recession. This means the Fed might hike rates by another 75 bps in September to cool the economy to contain inflation. Therefore, there can be a near-term strengthening of the dollar. It remains to be seen how FIIs will react to this,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Growth impulses in India are strong. Leading indicators like bank credit growth, capacity utilization in manufacturing, automobile demand etc. suggest an economy in strong rebound.

“Financials, capital goods and construction are on a strong wicket. Phar-ma and FMCG are stable. Robust jobs data in the US bodes well for the IT sector," he added.

Asian shares were mostly lower on Monday and the dollar held firm after a stunning US payrolls report pushed back against talk of recession but also bolstered the case for more super-sized rate hikes.

Markets quickly moved to price around a 70 percent chance the Federal Reserve will lift rates by 75 basis points in September, sending two-year yields up 20 basis points on Friday and further inverting the curve.

The risk haunted equity markets with S&P 500 futures and Nasdaq futures both down 0.2 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.5 percent, after three sessions of gains. Japan's Nikkei was flat and South Korea's KOSPI dipped 0.2 percent, while Chinese blue chips eased 0.1 percent.

EUROSTOXX 50 futures fared better and added 0.4 percent, while FTSE futures rose 0.2 percent.

US equities closed mixed on Friday, with Nasdaq closed 0.5 percent lower while the S&P 500 lost 0.2 percent. The Dow Jones gained 0.2 percent. For the week, Nasdaq rose 2.1 percent, the S&P closed 0.4 percent higher and the Dow lost 0.1 percent.