Positive global cues to take markets higher

Asian markets moved up after the minutes of the October US Fed meeting pointed to a December lift-off amid a cautious outlook for further rate hikes

The markets are likely to trade with a positive bias today tracking their global peers, after the minutes of the US Federal Reserve October meeting signalled at a December rate hike amid a cautious outlook for further rate increases. At 8:10am, the SGX Nifty was trading 0.9%, or 68 points, higher at 7,793 levels.

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Asian share markets rose on Thursday. Japan's Nikkei firmed 1% brushing aside a disappointing report on exports and imports. MSCI's broadest index of Asia-Pacific shares outside Japan added 0.6%. Australia's main index rose 1.1, aiming for a third straight session of gains.

 

The prospect of the first US hike in almost a decade kept the dollar strong overall and commodities under severe pressure. Investors also have to steer past a Bank of Japan policy meeting and minutes of the European Central Bank's last meeting.

Sentiment was supported by the Dow, which ended Wednesday with a gain of 1.43%, while the S&P 500 added 1.62% and the Nasdaq moved up 1.79%.

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"For once the Fed’s minutes were actually quite clear in their message: 'FOMC members wanted to convey December lift-off may be appropriate', even though they are still dependent on data, and a minority of doves wanted to delay longer, seeing downside risks to the outlook," points out a note from Rabobank International.

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"Indeed, with the Fed signaling that at long last it will hike, today’s first focus is whether the BOJ will flag that they are going to ease further at long last. Recent comments from the Bank suggest this is unlikely today regardless of the fact that inflation is nowhere near their 2% target, and the Japanese economy slipped back into a technical recession in Q3, making a mockery of their constantly upbeat projections," it adds.

Domestic cues

Back home, markets ended weak on Wednesday amid selling pressure in late trades after tension gripped Paris in the wake of fresh gun firing. Meanwhile, weakness in European shares amid fresh developments in Paris and losses in Asian peers tracking weak commodity prices weighed on investor sentiment.

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The Sensex shed 382 points to close at 25,483 and the Nifty50 dropped 106 points to finish at 7,732. The broader market also closed lower with both the BSE Midcap and Smallcap indices down 0.8% each. Market breadth ended lower with 1,050 gainers and 1,609 losers on the BSE.

"Wednesday's sharp correction surprised us to a great extent; but, we maintain our view that the index has a crucial and important support at 7691. Only a sustainable move below this level may trigger further correction in the market. Till then the possibility of bouncing back towards 7,820 - 7,860 cannot be ruled out," points out a Thursday morning note from Angel Broking.

As regards the Bank Nifty, Angel Broking says that a sustainable move below Wednesday's low (16,787) may drag the index to 16,580 - 16,400 levels. On the flipside, the immediate resistance for the index is placed at 17,028 and 17,187 levels.

With Reuters inputs