We expect a lower opening as other Asian indices are in the red

Well, by now it shouldn’t be surprising to see how things change so rapidly in capital markets. A few minutes are enough to alter the sentiment – from optimism to pessimism and vice versa. S&P’s warning to India that it could well become the first fallen angel in BRIC revived fears of a possible downgrade to junk.

We expect a lower opening as other Asian indices are in the red. Markets across Europe and the US finished lower, as the initial election over the Spanish bank rescue gave way to skepticism. Who will foot the bill for the Spain bank bailout? That is the question uppermost on minds of Spanish bondholders.

In addition, there is the looming threat from the upcoming Greek elections (June 17) The IIP reading for April is likely to be dismal after March’s contraction. However, much of the deterioration in IIP data may have been discounted already.

Technically: The NSE Nifty failed to sustain above 200 DMA on Monday as a late sell off led to formation of ‘dark cloud cover’ on candlestick chart. However, as long as the Nifty trades above 5000 levels the mood may remain positive. On the other hand, a break below 5000 would lead to major unwinding of long positions.

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