NEW DELHI: Positive momentum in Asian and US stocks is likely to give Indian equities a leg up on Wednesday amid fresh hopes of a possible resolution to the US-China trade tussle. "We will be having an extended meeting next week at the G-20 in Japan," Trump tweeted on Tuesday. While that is a good sign, indications of economic slowdown globally will continue to haunt investors, capping potential upsides. Also, market participants would await Fed's interest rate decision later in day amid speculation of a possible rate cut.
Let's take a look at the factors which may influence Wednesday's proceedings on Dalal Street.
Singapore trading hints at a positive start
Around 6:50 am (IST), Nifty futures on the Singapore Exchange traded 62 points, or 0.53 per cent, higher at 11,774, indicating a positive start for Dalal Street.
Tech view: Nifty forms a small bullish candle
Nifty50 ended a volatile session in the green on Tuesday and formed a small bullish candle on the daily chart. The session was technically important as the index managed to defend its 50-day moving average, which currently stands at 11,680, on a closing basis. Technical analysts expect Nifty to make some attempts to gain stability which may result into mild technical pullbacks. However, pullbacks are expected to remain limited.
Asia stocks jump
Asia stocks jumped on hopes that Fed will at least open the door to future rate cuts if it does not do so today. The reports of US-China talks next week also gave a shot in the arms of the markets. Japans Nikkei rose 1.5 per cent and South Korea's Kospi 1.1 per cent.
US stocks close higher
The Dow ended Tuesday's session with gains of 1.35 per cent, while the S&P 500 rose 0.97 per cent and the Nasdaq 1.39 per cent. The S&P 500 has gained 6 per cent so far this month to be 1 per cent from the all-time high hit in early May. All eyes are now upon the Fed which is scheduled to release a statement later today.
Dollar near two-week high
The US dolalr hovered near a two-week high level ahead of Fed's monetary policy decision. The dollar index versus a basket of six major currencies was steady at 97.615 after climbing to 97.766 on Tuesday, its highest level since June 3, Reuters reported.
Crude oil rises
Crude oil prices climbed on Wednesday on rekindled hopes for a US-China trade deal. Brent futures gained 34 cents to $62.48 a barrel while WTI futures rose 44 cents to $54.34
FPIs buy Rs 32 crore worth equities
Foreign portfolio investors (FPIs) bought Rs 31.73 crore worth of domestic stocks on Tuesday, data available with NSE suggested. DIIs were net buyers to the tune of Rs 181.03 crore.
- Rupee up: The rupee Tuesday appreciated by 21 paise to close at 69.70 against the US dollar as easing crude prices and a weak dollar ahead of the US central bank's meeting helped the currency snap its three-day losing streak.
- Call rates: The overnight call money rate weighted average was 5.78% on Tuesday, according to RBI data. It moved in a range of 4.40-5.90%.
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India bond yield at 20-month low
From Tokyo to Toronto, bond yields are headed pronouncedly south and Mumbai Tuesday was in lockstep with the global trend, with returns on the 10-year benchmark sovereign debt sliding to a 20-month low. India 10-year bond yields fell 0.12% to 6.81% on Tuesday, from 6.93% in the previous session, according to RBI data.
US, China rekindle trade talks
China and the United States are rekindling trade talks ahead of a meeting next week between Presidents Donald Trump and Xi Jinping, cheering financial markets with hope that an escalating trade war between the two countries would abate. Trump said on Tuesday that teams from the two sides would begin preparations for the leaders to sit down at the G20 summit in Osaka. China, also confirmed the get-together.
All eyes on US Fed meet
The US Federal Reserve opened its two-day policy meeting on Jun 18 to decide the course of interest rates. The meeting opens amid widespread speculation the central bank is closer to changing course as the global economy slows and trade tensions drag on. Next month the American economic expansion will hit 10 years and go into the record books as the longest ever. Fed Chairman Jerome Powell and other policymakers in recent weeks have floated the possibility of loosening monetary policy to keep the expansion from faltering.
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