Markets to get a positive start on Fed’s decision

The Indian markets seems to had guessed correctly what was coming in the Fed’s meet and surged in the last session, today the start is going to be the extension of the gains and Nifty may attempt to reclaim the 8000 level with likely halt in the exodus of foreign funds from domestic equities. Though, all eyes will now hinge on RBI’s policy decision later in the month for further cues, meanwhile RBI Deputy Governor Urjit Patel has said that sustained low inflation over medium-to long-term is necessary to bring down the cost of fund. He has also said that the central bank expects Current Account Deficit (CAD) around 1.5 percent of GDP in the current fiscal. Traders will be getting some support with Minister of State for Finance Jayant Sinha’s statement that the government is aiming for an 8-10 percent annual economic growth through supply-side measures to increase the capacity of Asia`s third-largest economy rather than risk higher inflation by stimulating demand. There will be some buzz in the banking and NBFC sector, as the RBI has accorded “in-principal” approval for 10 small finance banks that will focus on small geographies for operations but with a strong capital base.

The US markets made a mixed closing in last session after the Fed left the interest rates unchanged, in the face of jittery financial markets and a global slowdown. The Fed also said recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation. The Asian markets have made mostly a positive start, with the indices in the region cheering the Fed’s decision, though the Japanese market was suffering sharp cuts as the yen has strengthened against dollar.

Back home, Wednesday’s session turned out to be a good day of trade for the Indian equity markets, where frontline gauges garnered gains of around a percent, ending just shy of their crucial 26,000 (Sensex) and 7,900 (Nifty) bastions, as investors opted to buy beaten down but fundamentally strong stocks amid a firm trend overseas, ahead of the Fed’s rate decision this week. Sentiments remained up-beat with Cabinet approval of Shyama Prasad Mukherjee RURBAN Mission, allocating Rs 5,142 crore to develop 300 smart village clusters across the country. Also, there was report that the government panel set up to suggest a uniform rate of indirect tax under the GST regime will submit its report by this month-end and the roll out of the reform measure is possible any time next fiscal. Investors overlooked weak economic data that the exports fell for the ninth consecutive month, dipping by 20.66 per cent in August to $21.26 billion on the back of a steep decline in engineering and petroleum shipments. Non-oil imports rose 7.01% to $26.38 billion whereas oil imports plunged 42.59% at $7.35 billion in August 2015 over August 2014. The trade deficit rose sharply to $12.47 billion in August 2015 from $10.66 billion in August 2014. However, India's services exports rose 0.3% to $13.39 billion in July 2015 over July 2014, snapping decline for last four sequential months. Buying got intensified after European counters made a positive start, while Asian markets too ended mostly in green on Wednesday. Back home, the market participants remained hopeful that the Reserve Bank of India (RBI) would go ahead with a rate cut in its next monetary policy meeting. Buying in software and technology stocks too aided the sentiments on the back of weakness in Indian rupee against dollar. Finally, the BSE Sensex surged by 258.04 points or 1.00% to 25963.97, while the CNX Nifty soared by 70.05 points or 0.89 % to 7899.15. Indian markets remained closed on Thursday on account of Ganesh Chaturthi festival.