Sensex, Nifty Stare At Gap-down Opening

Indian shares look set to open sharply lower on Thursday as the Fed meeting outcome appeared more hawkish than analysts had expected.

The U.S. Federal Reserve signaled its first rate hike since 2018 will happen “soon.” Asset purchases are likely to halt in March while the process of balance sheet reduction will commence after it has begun raising rates.

Indian stock markets BSE and NSE were closed on Wednesday on the occasion of Republic Day.

On Tuesday, benchmark indexes Sensex and the Nifty ended a choppy session up around 0.6 percent and 0.8 percent, respectively as Axis Bank’s upbeat earnings results helped lift banking stocks. The rupee fell by 16 paise to close at 74.76 against the U.S. dollar.

The Union Budget will be presented at 11 AM on February 1, despite the Lok Sabha and the Rajya Sabha functioning in staggered timings in view of Covid-19 guidelines.

A day before, on January 31, President Ramnath Kovind will address the joint session of Parliament.

Asian markets tumbled this morning after a late-day pullback on Wall Street overnight. The dollar hit multi-week high against its major peers, while gold extended losses after having fallen the most in two months. Oil fell on profit taking after gaining about 2 percent in the U.S. session.

U.S. stocks erased early gains to end mostly lower overnight and Treasury yields spiked after the Fed indicated that it plans to begin raising interest rates “soon,” citing elevated inflation and a strong labor market.

The tech-heavy Nasdaq Composite surged as much as 3.4 percent before ending marginally higher.

The Dow and the S&P 500 slipped 0.4 percent and 0.2 percent, respectively as Fed Chair Powell backed a March liftoff and said he won’t rule out a hike every meeting.

He described the current inflation situation as “slightly worse” than in December.

European stocks rose sharply on Wednesday as investors awaited the latest Fed decision. Sentiment was underpinned after Microsoft forecast revenue for the current quarter broadly ahead of Wall Street targets.

The pan European Stoxx 600 advanced 1.7 percent. The German DAX surged 2.2 percent, France’s CAC 40 index climbed 2.1 percent and the U.K.’s FTSE 100 added 1.3 percent.