The plunging price of oil remains a big drag on market sentiment as West Texas Intermediate drops ever closer to the psychological $30 level. This oil weakness is putting equity markets in a near perpetual state of concern and until the price finds a floor it will be very difficult for traders to start feeling good about themselves.
At least the People’s Bank of China has for a second consecutive day broadly kept the mid-point for the yuan around flat, which is generating some support for the yuan, FXStreet reported.
Earnings season kicked off in the US overnight with Alcoa (Aluminum Company of America) reporting Q4 earnings. Whether a beat on earnings (surprise, surprise) and a slight miss on revenues become a consistent theme for the season as a whole, but it is an interesting start.
Asian markets closed lower with Japan playing a bit of catch up after a public holiday, whilst European markets are again mixed in early trading.
In forex markets, a reduction in risk appetite is seen again with the riskier Kiwi and Aussie dollar lower, whilst the safe havens (euro and yen) are doing well.
Gold has found some support after two negative days whilst oil is under increased pressure as both WTI and Brent Crude close in on $30.
Once more there is little for traders to get their teeth into on the economic calendar with UK industrial production also falling. The forecasts suggests the year on year data will stay at +1.7%.
Investors Wary
In India, markets continue to get battered in the post noon trades on Tuesday as investors remained wary of the health of China’s economy. Besides, the precipitous drop in crude oil prices has rubbed some more salt on the wounds, PTI reported.
Moreover, the announcement of December quarter earnings of TCS and IndusInd Bank has kept the participants on the edge.
At 1:15 pm, the S&P BSE Sensex was down 181 points at 24,643 and the Nifty50 was down 61 points at 7,502. The Bank Nifty has hit a fresh 52 week low, down at 15,729.70.
Slowing demand for oil from China and a stronger dollar has further pushed the international crude prices to the brink, hitting a fresh 12-year low. However, the on-going geopolitical tensions between the oil producing giants Saudi Arabia and Iran might provide some cushion to the falling oil prices, analysts believe.
European markets have also opened in red tracking weak global cues. The major indices are down between 0.2-1% each.
The biggest losers on the Sensex are TCS, Tata Motors, ONGC, Axis Bank, and Tata Steel, down between 2-3.5% each.
Stocks that have managed to find some ground in an otherwise weak market are NTPC, Sun Pharma, Adani Ports, BHEL , and L&T, up between 0.3-2% each.
