Markets may bounce back in opening trades and pare recent losses following rally in Asian and US markets after the US Federal Reserve pledged to hold rates near zero for an extended period.
The Nifty futures on the Singapore Exchange advanced 81 points, at 5,176.
Investors flocked back into equities to pick up bargain buys after the United States Federal Reserve chairman Ben Bernanke pledged to keep interest rates on hold "at least through mid-2013." This statement overshadowed Fed’s warning that recovery may continue to remain slow. The US markets rebounded sharply, the Dow Jones Industrial Average gained 4.7%, the S&P 500 added 4% and the Nasdaq climbed 5.3%.
Indices across Asia rocketed upwards, Japan's Nikkei Stock Average advanced 1.2%, China's Shanghai Composite Index added 1.8% and Hong Kong’s Hang Seng jumped 3.6%. The bounce was led by commodity related shares, exporters and banks.
While markets across the world rallied, it lacked the momentum seen on the way down in the past few sessions. Analysts said that volatility may continue as long as fears on global macro-economic outlook remained.
The cool off in commodity prices will come as a respite for India which is dealing with stubbornly high inflation levels. Economists said that the Reserve Bank of India may pause its tightening cycle after another 25 bps rate hike in September. The industrial output data for the month of July may also set the tone for the markets.