RTTNews - Thursday, the Indian market may open higher on favorable global cues after the U.S. Federal Reserve announced that it would keep interest rates unchanged amid some improvement in the economy, financial markets and housing spending. That said, heavy selling by foreign funds, concerns about a delay in arrival of monsoon rains for the June to September season and the settlement of derivative contracts may lead to volatility.
On Wednesday, FIIs sold shares worth Rs.791.85 crore on a net basis, while domestic institutional investors bought shares worth Rs.728.26 crore, data released by the BSE showed. On Tuesday, FIIs sold shares worth Rs.658.20 crore on a net basis, according to market regulator SEBI.
U.S. stocks closed mostly higher on Wednesday, although the major averages turned in a mixed performance. The U.S. Fed announced no change to its rate target and reiterated its commitment to the quantitative easing measures first announced in March. While the central bank noted some improvement in the economy and removed its warning about the possibility of deflation, many economists believe the historically low rates could remain for some time, leaving worries that the massive stimulus efforts could lead to inflation down the road.
A commerce department report which showed a 1.8 percent rise in durable goods orders for May also surprised economists, who had expected a decline of 0.9 percent. While the Dow Jones Industrial Average ended down 0.28%, the Nasdaq Composite index rose 1.55% and the S&P 500 index gained 0.65%.
The Indian ADRs also ended mostly higher. Satyam Computers advanced 4%, HDFC Bank and Wipro rose over 3% each, Reddy's Laboratories gained 1.16%, Infosys added 1.89%, MTNL ended up 1.02% and ICICI Bank edged up 0.39%, but Sterlite Industries ended down 1.69%
Crude oil futures closed a choppy session modestly lower on Wednesday after the Federal Reserve left interest rates unchanged. Investors also mulled over the Energy Department's weekly inventory report, which showed a drop in crude stocks but a rise in gasoline supplies. Light sweet crude for August delivery dropped to $68.67 per barrel on the New York Mercantile Exchange, down $0.57 on the session. In Asian trading on Thursday, crude oil extended its declines towards $68 a barrel under pressure from a stronger dollar.
Meanwhile, mildly positive global cues and support from frontline stocks helped the Indian market end on a positive note on Wednesday. But trading was volatile as traders either rolled over or squared their positions ahead of the June series derivatives expiry on Thursday. The BSE Sensex dropped to an intra-day low of 14,207 before recovering to finish at 14,423, up 99 points or 0.69% from its previous close, while the S&P CNX Nifty rose 46 points or 1.08% to 4,293.
The BSE small-cap and the mid-cap indexes advanced over 2% each. The market breadth on the BSE was extremely positive, as advancers outnumbered decliners by 1801 to 797, with 70 stocks closing unchanged. Stocks across the sectors, with the exception of banking stocks, ended in positive territory.
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