Nifty futures test 5000 mark; Asian indices slide sharply by Venky Vembu May 7, 2012

Hong Kong: The blood has barely been wiped off the trading floors after last week’s tumbles on the Indian markets. But already, markets are off to another bloody start to the week.

Nifty futures are again sharply down in early trades on Monday, testing the 5000 mark on very weak global cues after election results in Greece and France over the weekend, and tepid US employment data on Friday, busted investor sentiment. (More details here.)

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All across the region, trading boards are awash in red. As at 7.30 am IST, most of the indices are down in excess of 2 percent. Tokyo, returning from a holiday, is down the hardest, playing catch-up with last week’s falls: it’s now down in excess of 2.5 percent. Hong Kong is down about 2 percent, and Sydney about 1.5 percent. Shanghai is faring the best of the lot, down only about 0.2 percent.

We’re probably looking at sharp losses when markets open in Mumbai today. Reuters

Nifty futures are down nearly 1.5 percent, and are just a notch above the 5000 mark. This likely means that the Indian market will open with sharp losses to add to Friday’s fall.

Back home, the debate on the Finance Bill gets going today, and investors will be looking for clues from Finance Minister Pranab Mukherjee that the retrospective taxation proposals he announced in the Budget will be rolled back. The taxation proposal in the Vodafone case, and other similar cases, has unnerved investors, already reeling from the effect of an economy that’s slowing down. There’s been some speculation that the penalty provision will be waived, although Vodafone might still have to pay back taxes, with interest thereon.

Whether that will be enough to sustain foreign investors’ interest in the Indian market will be on test, but the Nifty futures market is the relative outperformer this morning, which says something.

Even so, given that risk aversion runs high today – and the rupee’s slide of recent days has impacted returns – we’re probably looking at sharp losses when markets open in Mumbai today.