We had mentioned in Wednesday’s closing report that Sensex, Nifty await Fed actions. The major indices of the Indian stock markets rallied strongly on Thursday, as the Federal Reserve maintained interest rates unchanged, to close around 1% higher than Wednesday’s close. The trends of the major indices in Thursday’s trading are given in the table below:
Indian equity markets soared on the back of positive global cues on Thursday. The key indices gained around a percentage each during the mid-afternoon trade session, as healthy buying was witnessed in stocks of banking, automobile, and capital goods. The BSE market breadth was tilted in favour of the bulls -- with 1,695 advances and 1,044 declines. On the NSE, there were 993 advances, 471 declines and 74 unchanged.
The Fed's decision to hold interest rates fuelled a rally in the equity markets globally leading to a sharp gap up move in our markets as well, according to market analysts. Initially on Thursday, the benchmark indices opened in the green following positive global cues. Investors' sentiments were buoyed on the US Federal Reserve's decision to keep its key interest rates unchanged for September. Besides, domestic cues such as the proposal to merge the general and railway budget, along with consultations to advance the budget presentation date, gave a positive momentum to the equity markets.
Union Finance Minister Arun Jaitley on Thursday said that infrastructure is the key to economic growth. Jaitley said this in his inaugural address at the BRICS (Brazil, Russia, India, China and South Africa) India 2016 seminar on "Best Practices in Public Private Partnerships (PPPs) and Long-term Infrastructure Financing". The one day seminar was organised in the national capital by the Department of Economic Affairs, Ministry of Finance, with organisational support from the Confederation of Indian Industries (CII). Delegates from BRICS countries and senior officials of the Finance Ministry, along with senior executives of private sector companies participated in the seminar. It was organised in the run up to the BRICS Summit scheduled for October, 2016. India assumed the chairmanship of BRICS in 2016. According to Jaitley, an institutionalised forum amongst BRICS countries could serve as a regional knowledge hub with exchange of information facilitated through cloud sharing, and other electronic methods. He pointed out that development projects in transportation sector like highways, ports and railways will be the area of mega economic activities as far as the infrastructure sector in India is concerned. The Finance Minister further said that investment from both the public and private sector will be required for financing projects in the areas of health, education, sanitation, renewable energy, highways, ports and railways among others. There is likely to be a good opportunity for investors in India in the infrastructure sector.
The US dollar decreased against other major currencies as investors were digesting the latest Federal Reserve statement. In the statement released on Wednesday after Fed's two-day policy meeting, the US central bank decided to keep its federal funds rate unchanged amid recent weak economic data and tepid inflation. "The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives," said the statement.
As the global financial markets waited nervously, the US Federal Reserve kept its key interest rates unchanged -- a move that should bring some cheer when Indian markets open on Thursday. "The committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives," said a statement by the Federal Open Market Committee after a much-watched, two-day meeting. The committee said even though unemployment rate is little changed in recent months, the job gains have been solid, even as household spending has been growing strongly. But business investment has remained soft, while inflation has continued to run below the 2 per cent long-term target. "Against this backdrop, the committee decided to maintain the target range for the federal funds rate at 0.25% to 0.50%."
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: