The Indian markets are set to open lower on Wednesday, tracking a sell-off in global markets as a slew of upbeat U.S. data fueled expectations that the Federal Reserve will raise rates sooner rather than later.
The Asian markets are declining across the board and the dollar extended overnight gains while gold held near a two-week low after sliding almost 2 percent yesterday. Crude oil prices are marginally higher after falling nearly 3 percent to a one-month low overnight.
Meanwhile, Finance Minister Arun Jaitley on Tuesday indicated that Goods and Service Tax (GST) could come into force earlier than expected. Addressing a gathering in Ahmedabad, Jaitley said that the GST could be implemented in the country from as early as January 1, 2016.
In another significant development, the government has set up a committee under former finance secretary Vijay Kelkar to revisit and revitalize the public private partnership (PP) model of infrastructure development.
The benchmark indexes Sensex and Nifty fell less than half a percent each on Tuesday against the backdrop of Fed rate hike concerns. Rupee weakness, weak quarterly earnings from a slew of companies and worries over Greece's ongoing debt woes also dampened investor sentiment as the Narendra Modi-led NDA government completed one year in office.
The major U.S. indexes fell about 1 percent each overnight, with the Dow and S&P 500 suffering their biggest single-day losses in three weeks, as traders returned from the Memorial Day holiday. Investors sought safety in government debt as encouraging new home sales and consumer confidence data pushed the dollar up and stoked fears about an earlier-than-expected rate hike. Meanwhile, a separate report on durable goods orders painted a mixed picture of the economy.
The European markets also closed firmly in negative territory on Tuesday as investors remained focused on financial and political developments in Greece and Spain. Greek bonds tumbled and the euro sank to a one-month dollar low against the dollar as investors fretted over Greece's ability to fulfill its next IMF repayment due on June 5. The German DAX dropped 1.6 percent, France's CAC 40 index slid 0.7 percent and the U.K.'s FTSE 100 shed 1.2 percent.
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