MUMBAI: Indian stocks are poised to open higher a day after the US Federal Open Markets Committee (FOMC) hiked the benchmark Fed Funds Rate by 75 bps as priced in by markets.
Singapore traded SGX Nifty signalled a 117 point uptick in the Nifty at open minutes before market opening at 9:15 am. Nifty closed at 15692 on Wednesday while SGX Nifty traded at 15809.
Asian markets too largely traded in the green with the Japanese Nikkei 500 up 1.15% and the Hang Seng up 0.3%. Ended up at 1%.
The range for today’s weekly expiry of Nifty options suggests a range of 15600-15800 and 16000. However, analysts like Hormuz Maloo termed the present market a “sell on rise “ one .
“ The market had priced in a 75 bps FFR hike and that’s what they got, so expect some short covering,” said SK Joshi, ED, Khambatta Securities.
However, a rise in the FFR means foreign institutions could sell more, going forward, with their risk-free rate of return from EMs like India reducing.
Their ability to borrow cheap money and invest in higher-yielding assets in EMs is being crimped with the Fed raising rates. FIIs have so far sold shares worth a whopping $25 bn and with the USD getting stronger post-Fed hikes, they are likely to continue this, said analysts.
“There will be some relief rally possibly in the EMs including India as Fed has stayed the course on curtailing inflation. As the curve becomes inverted, some risk appetite will be back,” said Nilesh Shah of Kotak AMC