Sensex, Nifty Likely To See Cautious Start

Indian shares look set to open on a cautious note Wednesday after recent rallies to record highs.

India’s trade deficit narrowed to $6.3 billion in May from $15.1 billion in April, data released by the Commerce Ministry showed as imports of gold crashed.

Investors await the outcome of a Federal Reserve meeting later in the day for further clarity on policymakers’ view on rising inflation, growth outlook and monetary policy going forward.

Amid the threat of higher prices and a tightening labor market, it is expected that the Fed could signal that it is beginning to think about scaling back its asset purchases.

Benchmark indexes Sensex and the Nifty eked out modest gains on Tuesday to reach fresh record closing highs, while the rupee closed at a one-month low of 73.31 against the greenback on data showing a larger-than-expected surge in retail inflation in May.

Asian markets were mostly lower this morning, as investors awaited the Fed decision as well as a slew of Chinese data due out later in the day for direction.

The dollar held near one-month high and the benchmark 10-year Treasury yield hovered around the 1.5 percent mark, while Brent crude prices added about 1 percent in Asian trade, after rising 1.6 percent on Tuesday.

U.S. stocks ended lower overnight after separate reports showed Americans slowed their spending in May and producer prices rose at their fastest annual clip in nearly 11 years in the month.

New York manufacturing activity cooled somewhat in June and confidence among homebuilders declined to a 10-month low, while a measure of industrial production grew at a stronger pace than expected in May.

The Dow shed 0.3 percent, the S&P 500 eased 0.2 percent and the tech-heavy Nasdaq Composite gave up 0.7 percent.

European stocks ended Tuesday’s session modestly higher in record territory for the eight day in a row as traders awaited clues from the Fed meeting.

The pan European Stoxx 600 edged up 0.1 percent. The German DAX, France’s CAC 40 index and the U.K.’s FTSE 100 all rose about 0.4 percent.