SGX Nifty indicates gap-down opening for Indian equity indices on Friday; check details

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Trading of Nifty 50 index futures on the Singapore stock exchange (SGX Nifty) indicates that the benchmark NSE Nifty index may see a gap-down opening on Friday. SGX Nifty traded 203 points, or 1.23%, down at 16369.20 on Thursday. Indian equity markets were closed on August 19 on account of a public holiday.

Why SGX Nifty declined?

Simple reasons, taper tantrum and weak global cues. Most Federal Reserve officials at the central bank’s July monetary policy meeting believe it will be appropriate to begin tapering asset purchases this year, according to the minutes of the meeting released on Wednesday. While there was still some disagreement over the timing of tapering the asset purchases, the US dollar index surged on these comments, breaking above the 93 mark to scale up highest level in nearly 8 months.

However, a survey conducted by Bank of America showed that 84% of money managers believe that the Federal Reserve will soon signal the start of the tapering of its asset purchase program. “84% of respondents said the Fed before the end of this year will announce the scaling back of its bond-buying program,” the survey said on August 17.

Elsewhere in Asia, Hang Seng closed 2.13% or 550 points down at 25316.33. Likewise, Nikkei and Shanghai settled 1.10% and 0.57% down at 27281 and 3,465, respectively. US Fed tapering usually implies that the US economy is recovering. Therefore, foreign institutional investors may take out their money from Asian equity markets to reinvest in the USA. Foreign portfolio investors (FPIs) have poured more than Rs 2.50 lakh crore in the Indian equity market since April last year. Any selling by overseas money managers can put some pressure on the ongoing record-breaking spree of the Indian equity market.

The benchmark BSE Sensex hit a record high of over 56,000 intraday for the first time on August 18. However, the index settled 163 points down at 55,629.