The News International Team
9:50 am Currency in 2015: Asian currencies could be in for a wild ride in 2015, with central bank policy on track for further divergence as the Federal Reserve prepares to raise interest rates, analysts say.
“The US Federal Reserve will be hiking interest rates next year, while some Asian central banks will be acting in the opposite direction. Growth momentum is firmly in favor of the US, while structural and cyclical slowdowns in certain parts of Asia will see growth differentials narrow,” ANZ said in a note last week.
The Federal Reserve is widely expected to hike interest rates in July after unwinding its quantitative easing program this year, according to CNBC’s latest Fed survey of economists, strategists and fund managers, released last week.
By contrast, most of Asia’s central banks are easing. The People’s Bank of China cut interest rates for the first time in two years in October, while the Bank of Korea cut rates to a record low that month. Meanwhile, the Bank of Japan remains committed to its massive stimulus effort, while calls for rate cuts in Thailand and Australia are growing.
9:30 am Market outlook: Mahesh Nandurkar, CLSA says state election results from Jharkhand and J&K confirmed that Narendra Modi continues to gain ground. “Since December 2013, BJP and allies have won 7 state level elections and account for 46 percent of India’s GDP with 10 contiguous states.
The just concluded Winter Session of the Parliament passed 12 bills, the highest since 2010. However, two of the most important bills i.e. insurance and coal could not be passed,” Nandurkar says in the note. The brokerage is of the view that the BJP will continue to face headwinds till April 2018 as the party is unlikely to have clear majority in the upper house till then.
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The market has opened in flat. The Sensex is up 21.47 points at 27527.93 and the Nifty is up 5.05 points at 8272.05. About 326 shares have advanced, 175 shares declined, and 20 shares are unchanged.
Cipla, HDFC, BHEL, Sesa Sterlite and Bajaj Auto are top gainers in the Sensex. Among the losers are Dr Reddy’s Labs, Tata Steel, GAIL, HUL and ITC. In a win-win deal, Aditya Birla Group company UltraTech Cement on Tuesday announced acquisition of Jaiprakash Associates ‘ two cement units and associated power plants in Madhya Pradesh for Rs 5,400 crore. JP Associates rises 5 percent, UltraTech Cement gains 2 percent.
The Indian rupee slipped in the early trade. It has opened lower by 15 paise at 63.43 per dollar against 63.28 a dollar Tuesday.
The dollar hovered at its highest in nearly nine years against a basket of major currencies after stunningly strong US economic growth spurred markets to bring forward the timing of a likely hike in interest rates.
Himanshu Arora of Religare said, “The USD-INR is expected to trade higher today on the back of strength in dollar against a basket of currencies and strong year-end dollar demand from state run banks and importers.”
Meanwhile, Wall Street enjoyed a “Santa rally,” as investors cheered data showing the US economy expanded in Q3 by the most in 11 years. The Dow closed above 18,000 but the Nasdaq fell, snapping a four-session winning streak, as biotechnology names weighed.
European and Asian markets were trading significantly in the green drawn on by a strong US economic engine with Japan’s Nikkei up over a percent. In commodities, Brent Crude rose above USD 61 per barrel.