Domestic markets are likely to open with a 100-point gap up opening, as Federal Reserve maintained the bond buying programme, and Chinese troubled Evergrande is set to meet its coupon rate payment commitments. Analysts expect the bull momentum to continue. With FPIs back with buying basket, experts believe that mid- and small-cap too will participate in this rally.
The US Federal Reserve Chair Jerome Powell on Wednesday said the US central bank could begin scaling back asset purchases in November and complete the process by mid-2022, as expected by market participants.
Evergrande Group’s main unit on Wednesday said that it would make a bond interest payment on September 23 (Thursday), giving a big relief to global markets that were on the edge over a possible default by the company. However, investors’ focus now shifts to US Presidents Biden’s $3.5 trillion package.
The expected announcement by FOMC chief lifted the US stocks on Wednesay. All three major indices, Dow Jones, Nasdaq and S&P 500 closed about one per cent higher.
“After a sell-off in the morning session, global indices recovered as traders reassessed risks from China’s crackdown on the real-estate sector and looked ahead to this week’s Federal Reserve meeting. Recovery in oil prices from the previous day’s heavy selling, as investors grew more confident that contagion from the distress of debt-saddled Chinese developer Evergrande would be limited also helped sentiments.” said Deepak Jasani, Head of Retail Research, HDFC Securities.
The SGX NIfty at 17,656 (at 8 am), indicates nearly a 100-point gap up opening for Nifty. The Nifty September futures on Wednesday closed at 17,568 on the NSE. Though Asian markets are largely in the green in early deal on Thursday, Korea’s Kospi is down marginally. Japan market is closed for a holiday today.
“Going ahead, market might continue with its consolidation for sometime led by fragile global cues,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.
On the domestic front, with active cases falling to 6-month low, and vaccination robust pace continuing along with Government’s proactive policies, sentiments continue to be buoyant with regards to healthy economic recovery. However, given rich valuations, one cannot ignore intermittent volatility and hence traders should navigate cautiously, he added.