Pre-market: Nifty seen opening lower; may retest 8420 levels

NEW DELHI: The 50-share Nifty index is expected to open lower on Tuesday following muted trend seen in other Asian markets. Tracking the momentum, the index is expected to retest its crucial support level of 8,420 in trade today.

At 07:30 a.m., Nifty India stock futures in Singapore were trading 14 points lower at 8,467 indicating a negative opening on the domestic market.

Markets would also react to current account data (CAD) which for the second quarter of the current financial year widened to $10.1 billion versus $5.2 billion YoY. The CAD now stands at 2.1 per cent of GDP versus 1.2 per cent YoY.

The Indian markets underperformed other Asian peers as profit booking extended for the second straight session in a row on Monday. The 50-share Nifty index slipped below its crucial psychological level of 8,500 and also broke below its 20-DMA placed at 8,452 levels.

Nifty remained in the grip of bears for the entire session to finally conclude the day with a loss of 100 points at 8,438. The Sensex lost 338 points and closed at 28,119 on Monday.

"The index now has an important support placed at 8,420. If the index is not able to protect the low of 8,420 in the next few sessions then we may see a deeper decline till 8,290," GEPL Capital said in a report.

"The level of 8,505 would now serve as a key resistance level for the index for the immediate term. If, however the Nifty manages to respect the support of 8,420 and clears 8,505 and sustains above it then it may scale up till 8550," added the report.

Ashwani Gujral, Fund Manager, Ashwanigujral.com is of the view that what we saw today was a mild correction, but my guess and the bigger correction probably would be post budget and for now 5 per cent style correction should be hit and people should try to buy the market may be around 8,150-8,200.

Overnight, US stocks ended lower with the S&P 500 posting its biggest daily percentage drop since Oct. 22 on Monday as oil's slump to a five-year low caused a selloff in energy shares.

"Worries about global growth added to the bearish tone. Data showed China's exports grew at a slower-than-expected pace and imports dropped in November, while Japan's economy shrank more than expected in the third quarter," Reuters reported.

"The S&P energy index tumbled 3.9 percent and traded at its lowest since June 2013 as Brent crude LCOc1 fell to a five-year low on predictions oversupply would keep building until next year," added the report.

The Dow Jones industrial average fell 106.31 points, or 0.59 per cent, to 17,852.48, the S&P 500 lost 15.06 points, or 0.73 per cent, to 2,060.31 and the Nasdaq Composite dropped 40.06 points, or 0.84 per cent, to 4,740.69.

Asian shares were trading lower. Japan's Nikkei 225 index which was trading 0.34 per cent lower at 17,874 and Hong Kong's Hang Seng index was trading 0.92 per cent lower at 23,826. China's Shanghai index was trading 1.3 per cent lower at 2,981.