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Nifty to open in green led by reform push, Fed comments

The Indian market is expected to open on a positive note on Thursday led by the clearance of big-ticket policy reforms and US Federal Reserve’s statement to raise rates not before next year. The SGX Nifty, an indicator of pre-market move, was trading at 8132, up 85 points.

Markets on Wednesday closed another day in the red with the Nifty losing half a percent but managing to close above 8,000. Sensex saw a 70-point drop and closed around 26710.

The country is now a step closer to the rollout of goods and services tax. The Cabinet clears the constitutional amendment bill for GST. Constitutional amendment bill for GST carries a five-year compensation mechanism. The bill is likely to be tabled in the Parliament, in the ongoing winter session.

Lok Sabha passes the Companies Act Amendment Bill 2014. The approved amendments simplify related party transactions and allow winding up cases to be heard by a two member bench among others.

Federal Reserve retained the phrase “considerable time” in its policy statement on Wednesday, and also introduced another word, “patient,” as the central bank readies to raise interest rates next year. Fed Chair Janet Yellen said the new language was not a change in policy, and that a rate increase was unlikely for the next several meetings.

Among global markets, stocks surged in the US, with the Dow marking its best session of the year, as investors celebrated a rally in the energy sector and the Federal Reserve’s pledge to be patient in raising interest rates. The CBOE volatility index, fell nearly 18 percent to 19.44.

In Europe, shares closed mixed, as banking stocks with a heavy exposure to Russia pared losses and energy stocks rebounded as oil prices recovered some ground.

Russia again attempted to halt a rout in the ruble, which climbed after the finance ministry said it had purchased the currency, with the nation moving towards recession. Meanwhile, Fed Chairperson, Janet Yellen says linkages backed spillovers to the US both through trade and financial channels would be small.

And in Asia, Bank of Japan kicks off its two-day monthly meeting today and will release its last policy decision for the year tomorrow.

In the currency space, the dollar pared gains against major currencies after the Federal Open Market Committee released a statement saying there remains “considerable time” before an interest rate hike. The rupee closed the day at 63.62 against the dollar, falling nearly 0.13 percent.

In commodities, Brent crude prices rise towards USD 61 per barrel as US data showed falling crude inventories. The move stemmed deep losses brought on by a supply glut and signals from OPEC producers and Russia that they will not cut production.

Back home, Oil marketing companies refuse to supply fuel to SpiceJet on credit basis, say no communication received from government. A handful of flights take-off from Delhi as the airline pays about Rs 3 crore to OMCs. But sources tell CNBC-TV18 that former promoter Ajay Singh could emerge as the white knight for the airline.

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