Markets across Asia reversed early gains after ratings agency-Moody's Investor Service downgraded Japan's credit score from Aa3 to Aa2 due to large build up in government debt since 2009 along with a high budget deficit. The Japan's Nikkei Stock Average declined 0. 2%, Hong Kong's Suspend Seng declined 0. 9% and China's Shanghai Composite was trading flat.
Immediately, Wall Street locked gains for the second consecutive day after recent data showed a weaker than-expected housing industry. The Dow Jones Industrial Average added 3%, the Nasdaq Composite Index as well as S&P 500 surged 3. 4%.
All eyes are on Federal Reserve's financial action, analysts expect Ben Bernanke to introduce some form stimulus to strengthen the ailing economy. While another round of stimulus by Federal Reserve may bring foreign institutional flows to India, macro-economic conditions continue remain a concern. Analysts recommend investors to carry on buying on dips. Motilal Oswal, CMD of Motilal Oswal Financial Services stated, “there are two reasons — high interest rates and government inaction that weighing on investors mind. But, I think current levels provide good opportunity to check out some of the large, reputed companies. ” Oswal finds select auto, telecom and FMCG companies attractive in the present market.