Sensex, Nifty Seen Flat On Optimism About Domestic Economy

(RTTNews) - Indian shares are seen opening largely unchanged Friday on the back of optimism that India is better placed to avoid the pitfalls of stagflation despite global headwinds. "Domestic economic activity has been gaining traction in spite of formidable headwinds from external developments," the Reserve Bank of India (RBI) said in its monthly bulletin.

India's current yield curve indicates an improvement in its long-term growth prospects but the fact that the yield curve has become steeper and concave reconfirms expectations of tighter monetary policy in the period ahead, the report added.

Benchmark indexes reversed course to end down around 2 percent each on Thursday amid concerns that higher U.S. interest rates could lead to more capital outflows from emerging markets, including India.

The rupee recovered from record lows to close 12 paise higher at 78.10 against the dollar.

Asian stocks traded mixed this morning, with Chinese and Hong Kong markets rising, led by gains in the technology sector.

The yen retreated from a two-week high ahead of the BoJ interest-rate decision, with the central bank likely to keep its ultra-easy policy, defying pressure from aggressive tightening from peers. Oil prices fell slightly in Asian trade after rising sharply on Thursday.

U.S. stocks tumbled in a broad sell-off overnight as disappointing housing, regional manufacturing activity and labor market data fanned worries of a recession.

The Dow plunged 2.4 percent, the tech-heavy Nasdaq Composite plummeted 4.1 percent and the S&P 500 shed 3.3 percent to reach their lowest closing levels in well over a year.

European stocks hit their lowest levels in 16 months on Thursday amid recession worries as Switzerland and the U.K. joined a global rush to raise interest rates.

The pan European Stoxx 600 fell 2.5 percent. The German DAX tumbled 3.3 percent, France's CAC 40 index gave up 2.4 percent and the U.K.'s FTSE 100 declined 3.1 percent.