Sensex, Nifty Seen Opening Up On US Rate Cut Hopes

Indian shares look set to open higher on Thursday, reflecting a positive reaction to congressional testimony by Federal Reserve Chair Jerome Powell.

That said, volatility cannot be ruled out ahead of market holiday on Friday on account of Mahashivratri.

Benchmark indexes Sensex and Nifty hit new record highs on Wednesday before ending higher by about half a percent each, led by private sector banking stocks and financials. The rupee gained seven paise to settle at 82.83 against the dollar.

Asian markets traded higher this morning, but regional gains remained capped as Powell described the U.S. economic outlook as “uncertain” and noted that bringing down inflation was “not assured.”

He further stressed that future interest rate decisions will be based on careful assessment of the incoming data, the evolving outlook, and the balance of risks.

The dollar index held steady after falling on Wednesday, tracking lower bond yields.

Gold held near a record peak while oil prices dipped slightly after rising sharply on Wednesday, supported by heightened Middle East tensions and Saudi Arabia’s decision to raise prices for its flagship crude grade to Asia.

U.S. stocks rose overnight after Powell signaled in testimony to a House of Representatives that the Fed is on track to cut interest rates “at some point this year” but officials need “greater confidence” inflation is moving sustainably toward 2 percent.

In economic releases, U.S. job openings fell marginally in January and private sector employment rose less than expected in February while the Fed’s Beige Book survey showed the U.S. economy expanded at a modest pace in early 2024.

The tech-heavy Nasdaq Composite climbed 0.6 percent while the S&P 500 gained half a percent and the Dow edged up 0.2 percent.

European stocks closed higher on Wednesday as the British government unveiled a pro-growth budget and data showed retail sales in the euro zone rebounded slightly in January.

The pan European STOXX 600 advanced 0.4 percent. The German DAX inched up 0.1 percent, France’s CAC 40 rose 0.3 percent and the U.K.’s FTSE 100 added 0.4 percent.