Sensex, Nifty seen opening higher; U.S. Fed raises taper amount, signals 3 rate hikes in 2022

Snapping four-session losses, the Indian stock market is expected to open higher on Thursday as trends on SGX Nifty indicate a positive opening for the domestic bourses. The firm cues from Asian peers and positive finish at Wall Street in overnight trade also indicate a gap-up opening for the Indian equities.

At 7:45 AM, the SGX Nifty futures were trading 0.4% higher at 17,688 on the Singapore Stock Exchange.

On Wednesday, the Indian equities closed lower for the fourth straight session as fear of hawkish policy statements by the U.S. Federal Reserve weighed on market sentiment. The Fed is widely expected to accelerate the pace of bonds tapering when it concludes its policy meeting on Wednesday night. The BSE Sensex dropped 329 points or 0.57% to close at 57,788 and the Nifty 50 index fell 104 points or 0.6% to settle at 17,221. Among the individual stocks, Bajaj twins—Bajaj Finance and Bajaj Finserv were the top laggards, followed by Infosys, HDFC, TCS, Adani Ports, ITC, Power Grid, IOC, and ONGC.

Shares in news

Individual stocks that will be in focus today include Vodafone Idea, Tata Steel, SBI, ICICI Bank, and Punjab National Bank.

· Vodafone Idea (Vi): The telecom operator is eyeing a four-fold jump in annual capital expenditure to $2 billion (about ₹15,000 crore), the company’s top management quoted as saying.

· State Bank of India: SBI, the country’s largest lender, is planning an Initial Public Offering (IPO) for its mutual fund joint venture with French asset manager Amundi. SBI and Amundi mull to sell a 10% stake in SBI Funds Management.

· ICICI Bank and Punjab National Bank: The Reserve Bank of India on Wednesday imposed monetary penalties on ICICI Bank, and Punjab National Bank due to deficiencies in regulatory compliance.

· Tata Steel: India Ratings and Research (Ind-Ra) has raised Tata Steel's long-term issuer rating to 'AA+' from 'AA'.

Here are key factors that will impact Indian stock market performance today:

US stocks surged after Fed's tapering decision

In the overnight trade, all the three major U.S. indexes closed higher after the Federal Reserve announced plans to end its pandemic-era asset-buying program and signalled three rate hikes in 2022. Following the conclusion of the two-day policy meeting, Fed Chair Jerome Powell expressed optimism about the U.S. economic recovery and indicated three quarter-percentage-point interest rate hikes by the end of 2022. Reacting positively to the Fed policy announcements, all three indexes reversed earlier losses and settled in positive terrain. The tech-heavy Nasdaq Composite was the biggest gainer by rising 2.15%, followed by the S&P 500, which climbed 1.63%. The Dow Jones Industrial Average ended 1.08% higher.

Asian shares rise on firm global cues

Asian stocks traded higher on Thursday following positive cues from Wall Street as investors reacted positively to the results of the U.S. Federal Reserve’s monetary policy meeting. The Fed official announced that it would wind up economic stimulus in March and proposed three rate hikes next year to tame inflation.

In Japan, the Nikkei 225 surged 1.67% and touched a three-week intraday high, while the Topix index climbed 1.2%. South Korea’s Kospi gained 0.4%.

In a similar trend, China’s Shanghai Composite shares rose 0.5%, while Taiwan’s benchmark gained 0.62%. The Straits Times in Singapore also traded 0.1% higher.

Meanwhile, Australia’s benchmark ASX 200 dropped 0.5%, while Hong Kong’s Hang Seng was down 0.3%.

Oil prices rise on demand optimism

Oil prices rose on Thursday on growing signs that supply growth will outpace demand next year, even as the Omicron variant of Covid-19 threatens to impact demand globally. In the overnight trade, West Texas Intermediate (WTI) crude settled up 0.20% at $70.87 per barrel, while Brent rose 0.24% to $73.88 a barrel.