Indian equity benchmarks rose early on Thursday, extending gains for the third straight session as risk sentiment improved significantly after the minutes of the latest Federal Reserve meeting showed a slowing pace of future rate hikes was on the cards.
The BSE Sensex index rose 154.82 points to 61,665.40, and the broader NSE Nifty index was 0.24 per cent higher in early trade.
“Markets could be in for a firm opening on Friday after the US Fed minutes indicated a slower pace of rate increase that bolstered investors’ sentiment worldwide. Suppose the bullish mood continues to the end. In that case, local traders will have to wind up their positions as today being the last day of the current month’s derivatives expiry,” said Prashanth Tapse, Senior Vice President for Research at Mehta Equities.
“Also, a fall in crude oil prices and the US dollar index are the two positive catalysts that would further aid sentiment,” he added.
Asian shares tracked Wall Street higher on Thursday, and a gauge of global stocks rose to its highest level in more than two months, and the dollar declined as the Fed minutes revealed that slowing interest-rate rises was supported by a majority of policymakers.
“In all, it is clear from the minutes that FOMC participants are determined to further raise the policy rate in the face of a very tight labour market and unacceptably high inflation,” analysts at Barclays told Reuters.
“However, the minutes also reveal an emerging divergence of views among members about the peak rate, and uncertainty about the peak rate.”
US futures climbed after the S&P 500 closed at a two-month high Wednesday before the Thanksgiving holiday.
The VIX, Wall Street’s “fear index” of implied volatility, plummeted for a sixth straight day to a three-month low barely above the long-term average of 20.0, signalling unequivocally that investors are firmly in “risk on” mode.
However, investors also assessed the impact of the record COVID-19 cases against indications of looser monetary conditions when they made the moves in Hong Kong and the mainland.
The People’s Bank of China would permit banks to lower capital reserves to encourage growth, according to official remarks televised on Wednesday.
China’s zero-Covid policy has had “a significant effect on consumption” while the property crisis is “affecting investment in the sector and affecting property developers,” Gita Gopinath, first Deputy Managing Director for the International Monetary Fund, said in an interview with Bloomberg Television.
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