Indian Markets
The frontline Indian stock indices advanced modestly in early minutes of trade on Friday, extending this week's rally after the RBI surprisingly slashed the cash reserve ratio (CRR) by an aggressive half a percentage point to ease liquidity conditions and boost credit.
The undercurrent today is also supported by a global rally after the Federal Reserve pledged to keep interest rates exceptionally low till the end of 2014 and indicated at a possible QE3 down the line to boost the US economy.
It seems as if most central banks are in accommodative mood to support domestic growth amid rising global uncertainties. This could potentially keep commodities, including crude and gold, firm. How much of this liquidity makes its way into equities (especially that of EMs) remains to be seen.
After the RBI’s 50 bps CRR cut, the Federal Reserve has surprised the markets by pledging to keep interest rates “exceptionally low” till late 2014. Besides, the Fed has also hinted at QE3 in future to mitigate the impact on the US from the euro area debt debacle. Meanwhile, even Brazil has hinted at further rate cuts.
US and European Markets
Talks on a debt swap to lower Greece’s borrowings and avert a collapse of the economy are scheduled to resume today.European finance ministers have insisted that Greek bondholders take bigger losses on their debt. The IMF has suggested that public holders of Greek bonds might have to increase their support. Private bondholders have agreed with European officials to implement a 50% cut in the face value of more than 200 billion euros ($262 billion) of Greek debt by voluntarily swapping bonds for new securities.
The euro fell today, snapping a four-day gain against the dollar on concern that Greece might default on its debt. The yen rose amid some safer haven buying. The dollar’s appreciation was limited.
Asian Markets
Today, the Asian markets are trading in the green with Strait times & KOSPI trading up by 0.3% each. Nikkei is trading up by 0.4%, while Hang Seng was up by 0.6%. The Chinese and Taiwan markets remained closed. SGX Nifty is trading higher by 49 points over Wednesday?s close.
Currencies
The Indian Rupee fell on Wednesday as US Dollar demand from oil importers for month-end payments offset a rise in the local share market, although traders said likely dollar sales by the central bank pulled it off the day's low.
Commodities
Oil was trading near the highest price in a week, heading for the first weekly gain in three. Gold traders are bullish for a fourth consecutive week.
Key events to watch for today
US : Fed Balance Sheet, Money Supply, GDP (Q-o-Q), Consumer Sentiment
India : WPI (Y-o-Y)
Outlook
The Indian Markets are likely to open higher following positive Asian cues. However, at higher levels it could witness some profit taking later during the day. Immediate resistance levels for the Nifty stand at 5215. Downside support to watch is at 5125. Among the sectoral indices, Auto, Consumer Durables and Metals could do well.
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