The US Fed's decision to cut interest rates by 25 basis points to a range of 1.75 per cent to 2 per cent will be the biggest factor giving direction to the markets today. This is the second time this year that the Fed has cut rates, althugh this time it has offered mixed signals on the next easing.
The U.S. central bank said the rate cut was intended “to provide insurance against ongoing risks" including weak global growth and resurgent trade tensions. Meanwhile, it described the US economic outlook as "favourable". Later, during his news conference, Fed Chair Jerome Powell said the Fed did not see imminent recession, or think the central bank would cut rates to negative territory.
Following the rate cut, the Wall Street closed higher on Wednesday. The Dow Jones rose 0.13 per cent, the S&P 500 gained 0.03 per cent, and the Nasdaq Composite dropped 0.11 per cent. Asian shares edged higher on Thursday. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.03 per cent. Japan’s Nikkei rose 0.46 per cent, while Australian shares rose 0.23 per cent. Trends on SGX Nifty, the Singaporean Exchange for Nifty Futures, were suggesting a flat start to the domestic indices.
Next, the Bank of Japan and Bank of England will announce their interest rate decisions later in the day.
Back home, the Finance Minister's meet with heads of public sector banks today to review credit flow in the economy will be closely watched.
In commodities, oil prices edged lower after Saudi Arabia said it would quickly restore full production. Brent crude oil futures settled at $63.60 per barrel, a 1.47 per cent decline.
Factors such as the movement of rupee against the US dollar, oil price movement, foreign capital flows, and stock-specific action will also influence trading sentiment.
On Wednesday, the S&P BSE Sensex ended at 36,564, up 0.23 per cent, and the Nifty50 index ended at 10,841, up 0.21 per cent.
In the currency market, the rupee settled 54 paise higher at 71.24 against the US dollar.
Top headlines for the day --
-- The overall advance tax collection grew by 6 per cent between April and mid-September as against 18 per cent in the year-ago period indicating a deepening economic slowdown.
-- The Reserve Bank is looking at structuring the interest rate regime for housing finance companies, according to a Business Standard report
-- The Union Cabinet on Wednesday banned all forms of nicotine-based electronic cigarettes in the country, citing potential risks posed to the youth and students
-- The government has removed import duty on open cell panels and their key components which may allow TV manufacturers to cut prices by up to 3.5 per cent ahead of festive season.
-- In an interview with Business Standard, Marc Faber, the Editor and Publisher of The Gloom, Boom & Doom report says the Indian economy can worsen further and that market valuation are too steep
And before we wrap, here is a stock recommendation by CapitalVia Global Research --
The brokerage recommends buying Nestle above Rs 12,950 with a target of Rs 13,650. The stop-loss should be placed at Rs 12,500