Nifty likely to open 100 points higher in line with SGX Nifty

Thanks to positive comments from US Fed chief Jerome Powel, world markets are on a song. SGX Nifty at 18,218 signals that Nifty futures to top 18,200-mark comfortably and Nifty to open with a gap up of 100 points. Nifty futures on TUesday closed at 18,085.

Equities across the Asia, gained in excess of over 1 per cent, led by Japan, Korea and Australia. Overnight, the US stocks,which opened on negative ahead of Jerome Powell testimony, regained strength to end sharply higher.

The US Fed chief Powell highlighted elevated inflation as a result of supply chain issues and said the Fed would use all of its tools to prevent higher inflation from becoming entrenched. "We can begin to see that the post-pandemic economy is likely to be different in some respects," Powell said. "The pursuit of our goals will need to take these differences into account."

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said investors continue to monitor the impact of central bank’s tightening of their monetary policies and the spread of the omicron Covid-19 variant. In the previous two decades, there have been two periods when the Fed has raised interest rates (Jun’04-Jun’06) and (Dec’16-Dec’18).

"The Nifty has performed well in those two periods, despite rate increases by the Fed. Going forward we expect market to remain steady on back of expectation of strong corporate earnings season, upcoming budget and positive macroeconomic data. The key risk in the near term might be any changes by government in restriction norms due to rising cases, he added.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities, said "A reasonable long candle was formed on the daily chart, which indicate a range bound action in the market with positive bias. The near term trend of Nifty remains intact and the positive chart pattern of higher highs and higher lows is active on the daily chart."

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