The risk aversion is back. The Indian rupee is back above the 50 units a dollar mark and global equity markets are retreating on broad based selling.
With the assembly poll results sparking concerns about the government’s ability to take decisive policy action, investors are worried that the domestic economy might slow down further.
Cues from the global markets are not encouraging either. Overnight, stock markets in the U.S. registered their first big loss of 2012 on concerns about the global economy and Greece debt-swap deal.
Europe’s economy contracted in the December quarter as investments declined the most since 2009 and exports and consumer spending dropped. According to Bloomberg, GDP shrank 0.3% from the September quarter.
The shrinking European economy and lingering Greek deal with its private creditors revived concerns about the global economy. S&P 500 lost 1.54% to 1,343 on selling in stocks of financials and commodity companies.
Asian markets also opened on a weak note. Japan’s Nikkei fell 0.79% to 9,561 on selling in stocks of export dependent companies.
Brent crude fell below $123 to $122.07 a barrel on speculation that the weakening global economy will curb demand for fuel products.
Back home, retail stocks could be in limelight. According to The Economic Times, prime minister Manmohan Singh told an industry body that the government is making renewed efforts to open up foreign direct investment in multi-brand retail.
Keep an eye on pharmaceutical stocks. In a blow to drug makers, the department of pharmaceuticals and the health ministry have struck down a recommendation to introduce market-based pricing in favour of the current practice of cost-plus pricing of drugs, especially in oligopolistic markets.
Stocks of iron ore exporters like Sesa Goa could witness some action. The government has reduced the railway freight charges on iron ore meant for exports by 16% effective Tuesday. The move is expected to help iron ore exporters who have come under pressure after an increase in export duty.
Hotel Leelaventures has been referred to the corporate debt restructuring cell to recast Rs 4,000 crore worth of debt, reports the Business Standard. According to the report corporate debt restructuring cell will meet next week to discuss the contours for the debt recast.
Novelis, a subsidiary of Hindalco Industries, is looking to conclude sale of its three aluminium foil manufacturing plants to American Industrial Acquisition Corp by June this year, reports The Hindu Business Line. The plants are located in France, Luxembourg and Germany.
Finally, no new bank was created in the U.S. in 2011. According to the Financial Times, 2011 was the first year in decades that the US did not see creation of a single start-up lender.