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Markets in wait and watch mode ahead of US Fed outcome

Domestic benchmark indices BSE Sensex and NSE Nifty pared their initial gains in the last leg of trade and ended on a flat note on Wednesday

By: | New Delhi | Updated: September 21, 2016 5:15 PM
BSE Sensex NSE Nifty US Fed Domestic benchmark indices BSE Sensex and NSE Nifty pared their initial gains in the last leg of trade and ended on a flat note on Wednesday

Domestic benchmark indices BSE Sensex and NSE Nifty pared their initial gains in the last leg of trade and ended on a flat note on Wednesday ahead of the US Federal Reserve outcome which is widely expected to maintain a status quo on key rates following weak economic data and tepid inflation. The BSE Sensex closed 15.78 points down at 28507.42, while Nifty closed 1.25 points up at 8777.15.

Among the 51-components in the Nifty index, 27 stocks ended the day in green with Bharti Infratel surging the most — 4.65 per cent, followed by Eicher Motors (up 3.20 per cent), Hindalco (up 2.58 per cent), YES Bank (up 1.16 per cent) and Tata Steel (up 1.04 per cent). On the other hand, Bank of Baroda, Power Grid, Ambuja Cements, ITC and ONGC slipped by 1.62 per cent, 1.54 per cent, 1.20 per cent, 1.15 per cent and 1.13 per cent, respectively.

Sectorwise, the BSE FMCG index, Power, Bankex and Capital Goods index declined by 0.58 per cent, 0.22 per cent, 0.19 per cent and 0.14 per cent, respectively. The BSE Telecom index, Consumer Durables, Metal, TECk, IT and Auto gained by 1.52 per cent, 0.85 per cent, 0.53 per cent, 0.43 per cent, 0.29 per cent and 0.25 per cent, respectively.

On the US Fed outcome which is scheduled to be announced around 11.30 pm (IST), independent market expert Ambareesh Baliga said, “Fed is expected to maintain status quo as it will prefer to look for more data to better gauge the strength of the economy. Statement is expected to remain hawkish pointing to a December rate hike. Equity markets have priced in no rate action today.”

According to Reliance Securities, equity markets will be keenly watching out for outcome for Fed Meeting, where in they will look for the tone of the statement more than the stance itself. Any action to increase fed funds rate will have negative consequences for all emerging markets. Equity markets will react negatively also to a hawkish statement even in case rates are left untouched. Market trends indicate that participants are in wait and watch mode rather than taking any position.’

The market breadth, indicating the overall strength of the market, remained strong. On BSE out of total shares traded 2923, shares advanced were 1413 while 1312 shares declined and 198 remained unchanged.

Other Asian markets closed mostly higher today with Japan’s Nikkei lead the rally with 1.91 per cent gains, followed by Taiwan Weighted (up 0.73 per cent), Kospi Composite (up 0.51 per cent), Jakarta Composite (up 0.76 per cent), Hang Seng (up 0.59 per cent) and Shanghai Composite (up 0.10 per cent).

Bank of Japan on Wednesday kept its key interest rate unchanged at -0.1 per cent and announced substantial changes to its monetary policy framework, including adopting quantitative and qualitative easing with yield curve control across different maturities.

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