Sensex opens 300 points lower on weak global cues

Markets have erased gains of last two trading sessions and have opened weak tracking muted trends among global peers.

The 30-share Sensex has opened lower by 320.30 points at 25,399.28 and the Nifty has dipped 113 points at 7,705.45.

Wall Street closed lower yesterday and Asian markets retreated after Japan’s key gauge of capital spending unexpectedly fell for a second straight month in July indicating that the economy is struggling to stabilize.

Also, consumer inflation in China rose to 2% in August, its highest level in a year as the threat of deflation receded further in the world’s second-largest economy.

Meanwhile, Standard & Poor’s cut Brazil’s prized investment grade credit rating to junk on Wednesday and warned that it could lower it again in the coming months, in a major blow to President Dilma Rousseff’s government.

Back home, foreign portfolio investors (FPIs) sold shares worth a net Rs 452.13 crore yesterday, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1194.58 crore yesterday, as per the provisional data.

A broad based rally was witnessed as stocks surged across the world yesterday, 9 September 2015 after China announced fiscal stimulus for the economy. The the S&P BSE Sensex, jumped 401.71 points or 1.59% to settle at 25,719.58.

GLOBAL MARKETS

Asian stocks fell on Thursday after lacklustre Chinese and Japanese economic data added to heightened worries about slackening global growth, sapping investors' appetite for riskier assets.

The latest policy response to rising global risks came from the Reserve Bank of New Zealand (RBNZ), which cut its benchmark rate by 25 basis points to 2.75% and signalled more easing if China's economy slows down further.

Those risks were highlighted in data showing China's consumer inflation in August edging up, but producer prices falling for the 42nd straight month in the latest sign that deflation remains a significant risk for the world's second-largest economy.

Amid the sombre mood, the previous day's policy-hopes driven surge in the Shanghai Composite Index flagged and the shares fell 1.6%. The losses were limited for now, however, as soft indicators fanned expectations for extra government stimulus.

MSCI's broadest index of Asia-Pacific shares outside Japan was 1.8% lower after rallying 3.2% on Wednesday. Australian shares fell 2.2% and South Korea's Kospi shed 0.1%.

Tokyo's Nikkei fell 2.9% in the wake of the downbeat Japanese machinery orders numbers, after jumping 7.7% the day before amid hopes for fresh government stimulus.

With Reuters input