Pre Market Report- Gap up opening likely for Sensex on Fed rate outlook
18/08/2016
Indian equity benchmarks are likely to witness a positive opening on Thursday tracking a rally across most Asian stocks and a bullish finish at Wall Street overnight as FOMC minutes signaled that interest rates in the world’s biggest economy could stay low in the near-term, bolstering risk taking appetite. A slow pace of US monetary tightening may boost capital flows to emerging markets such as India. Gains in the CNX Nifty Index Futures for August delivery which was trading at 8,654.5, up by 0.29 per cent or 25.5 points at 10:34 AM Singapore time, signal that the Sensex may open higher today. Shares of India Cement will be in focus as the company reveals its April-June 2016 quarter report card. However, in the absence of any major domestic triggers, Dalal Street is expected to consolidate in the near-term. Marking a second straight drop, the 30-share Sensex on Wednesday fell 59.24 points or by 0.21 per cent to 28,005.37 tracking global weakness after a top Fed official hinted at a September US rate hike.
Most Asian stocks advanced after Fed minutes showed that policymakers from the world’s top central bank were divided over the urgency to raise interest rates. Officials saw little risks of a surge in inflationary pressures, raising speculation that borrowing costs may stay at lower levels for a longer period, easing worries of September tightening. Shanghai Composite climbed, Hang Seng surged over 1 per cent and Japan’s Nikkei 225 fell as a stronger yen curbed the appeal of exporter stocks and as exports declined 14 per cent in July 2016, year-on-year, marking the biggest drop since 2009. US stocks rose on Wednesday as traders cheered Fed minutes which showed that officials in July were split over the need to raise interest rates again in the near-term as they agreed to wait for some more data before deciding on such a move.
