Disappointment from the US Fed and the absence of any domestic triggers resulted in the market snapping its four-day winning streak and close marginally in the red yesterday. The first two events of the current week that are Reserve Bank of India's first quarter monetary policy review and Federal Reserve's two-day meeting were completely non-event for the market. The RBI had kept policy rates and cash reserve ratio unchanged on Tuesday, but raised inflation forecast to 7% from 6.5% for financial year 2012-13 and cut GDP forecast. The US Federal Reserve too kept Fed funds rate unchanged at 0.0%-0.25%, but they say, "We will provide additional accommodation as needed to promote a stronger economic recovery." Now every market is waiting for the outcome of European Central Bank's rate decision - the last major event of the week - that will be announced today. The BSE Sensex fell 33.02 points to close at 17,224.36 on somewhat profit booking. Meanwhile, the NSE benchmark declined 12.75 points to 5227.75.
The US markets ended lower on Thursday, extending the downward move seen over the course of the three previous sessions. The markets reacted negatively on ECB's decision to leave interest rates unchanged following a quarter basis point cut at its previous meeting last month. The report from the Labor Department showed that initial jobless claims crept up to 365,000 (expected 370,000 in the week ended July 28th) from the previous week's revised figure of 357,000. The same did not seem to amuse the traders. Somewhat weaker-than-expected Chinese manufacturing data also added to the engulfing gloom ahead of the Fed decision tonight. The Dow Jones industrial average fell 92.18 points, or 0.71 %, to 12,878.88. The S&P 500 Index dropped 10.14 points, or 0.74 %, to 1,365.00. The Nasdaq Composite lost 10.44 points, or 0.36 %, to 2,909.77.
Asian shares and the Euro fell today as investors shunned risk after the European Central Bank took no immediate action and only hinted at future steps to tackle the Euro zone's fiscal woes, following similar inaction from the U.S. Federal Reserve. Japan's Nikkei 225 index was trading 1.2% lower at 8,546.75 and Hong Kong's Hang Seng index was trading lower at 19,563.12, down 0.60%. South Korea's Kospi index was trading 0.4 % higher at 1,861.45. China's Shanghai index was trading 0.2% higher at 2,115.12.
The BSE Sensex fell 100 points in early trade on Friday as the European Central Bank, after inaction from the Federal Reserve, disappointed markets looking for an imminent move to deal with the euro zone debt crisis, spurring risk aversion. The monsoon has now turned out to be a major concern for Indian markets. The BSE benchmark declined 121 points to 17,103 and the NSE benchmark was down 38.35 points to 5,189.40.
European Central Bank - the last major event this week after RBI policy and FOMC meet - too disappointed the street by keeping policy rates unchanged yesterday. The central bank has not even announced any new policy measures to revive sluggish economic growth.
Mahindra Satyam surged over 4% after better than expected numbers in the first quarter of FY13. Glenmark Pharma was up over 1%, Oracle Financial rose 1.8% and Shasun Pharm gained 0.5% after June quarter results.
Other Economic and Political News:
- CERC orders probe into grid failure, wants report by August 8
- Monsoon overall deficit more than 10%
- Rural Development ministry plans big rural job push to tackle drought
- Reliance-BP plan to buy stake in Petronet LNG terminal shelved
- Sun Pharma looks to acquire GermanyRs.s Arzneimittel
- JSPL arm raises US $150mn via ECB