Market to open positive on global cues

Market is expected to open flat to positiv on mixed global cues. Asian markets are up today as US Federal Reserve has decided to taper its stimulus program beginning January but decided to keep interest rates at historic lows on Wednesday.

At 8:58 am, the SGX Nifty was trading at 6295 up 29 points, indicating a positive start.

After keeping investors guessing for several months on when and how much it will taper its $85-billion-a-month bond buying programme, the Federal Open Market Committee (FOMC) finally decided to start tapering its third round of quantitative easing.

Beginning in January, MBS purchases will be reduced to $35 billion-a-month (from $40 billion/month) and the pace at which the Fed purchases longer-term Treasuries slows down to $40 billion-a-month (from $45bn/month).

Analysts suggest that the FOMC made this decision because of the reduction in unemployment since the start of QE3 (quantitative easing) and the stronger non-farm payrolls in recent months.

"It likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2%, especially if projected inflation continues to run below the committee's 2% longer-run goal," the Fed statement said.

The US Senate passed a two-year budget deal on Wednesday to ease automatic spending cuts and reduce the risk of a government shutdown, but fights were already breaking out over how to implement the budget pact. By a vote of 64-36, the Senate sent the measure to President Barack Obama to be signed into law, an achievement for a divided Congress that has failed to agree on a budget since 2009

Asian share markets rallied on Thursday as a Federal Reserve commitment to low rates offset a long-dreaded decision to taper stimulus, sending Wall Street to record heights and the dollar galloping above 104.00 yen for the first time since 2008. The dollar was a major beneficiary, surging to 104.15 yen while the euro toppled back to $1.3685.

Japan's Nikkei share average jumped 1.5% on Thursday morning to within striking distance of its year high, as global equity markets took the glass half-full view after the US Federal Reserve announced it would start to unwind its historic stimulus. Tokyo stocks were also bolstered by a surge in the dollar/yen to over five-year highs in the wake of the Fed decision, underscoring the benefits of a weak currency for Japan's export-reliant economy.

The Fed said it would reduce its monthly asset purchases by $10 billion to $75 billion, while it also indicated that its key interest rate would stay at rock bottom even longer than previously promised.