Payback panic!

We are more disturbed by a calamity which threatens us than by one which has befallen us. - JL Spalding

Global jitters are back to haunt us just when the Indian indices were hoping to surpass previous intermediate highs. Barring double-digit inflation, the Indian economy remains on firm footing. But then we remain at the mercy of the world.



The Indian indices are set to open weak but there could always be a pull back in case there is some improvement in the temporary worries. The positive action may continue in some small cap and mid-cap counters. Kotak Bank is reportedly selling 4.5% to Japan's Sumitomo Mitsui Banking Corp. @ 833 a share. M&M is said to be eyeing Boeing's spares unit in Australia

The markets were disturbed on Tuesday by a host of global reasons. Weak reading on Japanese export demand and household spending and a revised reading on Chinese leading economic indicators sent global indices into a tailspin.

The euro too plunged to record low versus the Swiss franc amid worries over the region’s banking system. Renewed fears about liquidity took center stage as Thursday is the due date for repayment of the ECB’s 442 billion euro in one-year loans; interbank rates jump to 9-month highs.

Back in the US, recent economic reports have not been too encouraging. Also, the US indices are close to key technical support levels while China is said to have broken them.

As far as the Nifty is concerned, it is back to the support of rising trend line, drawn from troughs of 4786 and 4980 levels. In case it is unable to sustain above 5240 levels, short term uptrend is likely to come under threat and Nifty could test levels of 5200.

The US indices came crashing after a big drop in consumer confidence. Dow Jones fell 268 points, or 2.7%. The Nasdaq dropped 85 points, or 3.9%. The S&P 500 (SPX) lost 33 points.

U.S. light crude oil for August delivery fell $2.83 to settle at $75.94 a barrel on the New York Mercantile Exchange.

Some strategists questioned the indiscriminate selling in world equities on one piece of Chinese economic data that we didn't have three months ago. The Conference Board’s Chinese index is a recent addition from the New York research group.

The significance of Confidence Board's leading economic index for China is "overstated," a China economist says. Several reports cited the revision as a reason for the 4.3% drop in the Shanghai Composite Index, following which most global stock markets also tumbled.

Major US indexes finished at their lowest level of the year after a drop in consumer confidence. All eyes will be on 9,816.49 for the Dow. With this week's fall, the S&P 500 Index has dropped within striking distance of major support at the 1,040 mark. This will be its fourth test of this significant floor, and a break below this could leave the US markets vulnerable to potentially more meaningful downside.

Stocks in Europe slumped in the worst single-day decline in more than a month, on fears about the strength of the economies of the US and China as well as the health of the European banking sector. UK stocks dropped sharply, as fears over Chinese and global economic growth eliminated the previous session's advance.

Spanish banks were hit hard by the European Central Bank’s refusal to extend the one-year special low-rate financing facility launched last summer.

Yield on the US 10-year Treasury slipped below 3% amid worries about the euro-zone’s financial system and global growth prospects. Wider risk aversion on global markets set the tone as crude oil and base metals prices slid.

US stocks tumbled to finish at their lowest level of the year. The Dow Jones Industrial Average fell 268 points, or 2.7%, to end at 9,870.30, its lowest close since early November.

The S&P 500 Index lost 33.33 points, or 3.1%, to 1,041.24, its lowest level since late October. The broad index was weighed down by a 3.9% drop in both its industrials and financials sectors.

The tech-heavy Nasdaq Composite Index was the hardest hit of the three major averages, slumping 85.47 points, or 3.9%, to 2,135.18.

The Dow fell as much as 326 points and the S&P hit an 8-month low.

Industrial companies and natural-resource firms were among the hardest hit after the Conference Board revised downward its leading economic index for China.

For every stock that rose, more than 14 were on the decline on the New York Stock Exchange, where 1.6 billion shares traded.

The euro slumped 0.7% versus the dollar but remained above the four-year low of $1.188 hit earlier in the month. The dollar was down 1.1% versus the yen.

US light crude oil for August delivery fell $2.83 to settle at $75.94 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery gained $3.60 to $1,242 an ounce.

Treasury prices rallied, lowering the yield on the 10-year note to 2.97% from 3.03% late on Monday.

Stocks slipped at the open on global concerns but the selling picked up steam after the release of the Consumer Confidence index for June.

Confidence slumped to 52.9 from 62.7 in May, the Conference Board reported, with the decline reflecting worries about the labour market and economic outlook. Confidence was expected to fall to 62, according to economists.

Earlier, the S&P/Case-Shiller index showed home prices in 20 U.S. cities rising in April, with the jump mostly attributed to a tax credit. Home prices rose 3.8% in April versus a year ago, according to the S&P/Case-Shiller Home Price Index of 20 major housing markets.

That was a bigger jump than expected, with economists looking for a climb of 3.4% after a boost of 2.3% in March. Home prices also rose 0.8% in April from March levels. However, prices remain off over 30% from the peak.

Electric car maker Tesla Motors debuted on the Nasdaq under the ticker TSLA, rising 12% from its IPO price late on Monday. Tesla priced its shares at $17 each, above the $14 to $16 target range, allowing it to raise over $226 million in the IPO.

The downbeat sentiment had investors flocking to government debt, with yields on the 2-year Treasury note falling to record lows.

Europe's common currency also fell, with labour strikes in Greece and Spain illustrating discontent with the continent's austerity measures.

Credit-default swaps spreads in Greece and Spain have leapt forward to all-time highs as the market is predicting that neither of these countries will be very successful in their austerity measures or cutting their debt enough without some additional aid.

Stocks in Europe slumped in the worst single-day decline in more than a month. The Stoxx Europe 600 index dropped 3% to 243.82, more than eliminating Monday's advance.

Reports said that Spanish banks are lobbying the European Central Bank to take action to ease the impact from Thursday's expiration of a one-year, 442 billion euro funding program.

The UK FTSE 100 dropped below the 5,000 mark, retreating 3.1% to 4,914.22 and the German DAX lost fell below the 6,000 level, retreating 3.3% to 5,952.03. The French CAC 40 loaded with institutions leveraged to Southern Europe, fell 4% to 3,432.99.

Banks on Thursday must repay the 442-billion-euro loans, which were taken out a year ago in the central bank's largest-ever long-term repo operation. The massive operation, which allotted loans in return for collateral at a fixed rate of 1%, was a central part of the ECB's effort to ease a liquidity crunch across the region.

But banks continue to struggle to meet financing needs, with Spanish banks seen as a particular source of concern amid reports many institutions are unable to tap capital markets.

Barclays Capital estimated that €250 billion to €300 billion of the one-year facility will be rolled over into three-month loans. Deutsche Bank estimates current refinancing requirements at around €700 billion a year.

A low rollover would likely put pressure on short-term funding rates while a high figure would likely drive up yields of countries, such as Spain and Portugal, that have been more reliant on ECB funding.