The Indian equity benchmarks, the BSE Sensex and the NSE Nifty, are set to open higher on Thursday, following positive trading across Asia and a strong finish on Wall Street overnight after a widely-expected rate hike by the U.S. central bank. The Federal Reserve raised its interest rate by 0.75%, its biggest rate increase since 1994, and projected a slowing economy and rising unemployment in the coming months. The positive trends on SGX Nifty also indicated a gap-up opening for the domestic bourses, with SGX Nifty futures trading 125 points, or 0.8%, higher at 15,796 on the Singapore Stock Exchange at 7:40 AM.
On Wednesday, the Indian share market ended lower for the fourth straight session, tracking mixed cues from global peers ahead of the US Federal Reserve’s policy decision. The rupee slipped to a fresh all-time low against the U.S. dollar amid persistent fund outflows by foreign investors and weakness in the equity market. Swinging between gains and losses, the BSE Sensex witnessed range-bound trade, before settling 152 points, or 0.29%, lower at 52,541, hitting an over 10-month low. Similarly, the NSE Nifty closed at 15,692, down 40 points, or 0.25%. The top losers on the BSE Sensex pack were NTPC, Infosys, Reliance Industries, Wipro, HUL, Tech Mahindra, PowerGrid, and ITC. Among BSE sectoral indices, power declined the most, followed by energy, oil & gas, utilities, teck, and realty.
Stocks to watch
State Bank of India: The PSU lender has raised the minimum interest rates for home loans to 7.55% effective Wednesday. This follows a 50 basis points hike in repo rate by the Reserve Bank of India (RBI) last week.
Usha Martin: Promoter groups Peterhouse Investments & PACs have offloaded 63,000 equity shares in the company via open market transactions on June 14 and June 16.
UPL: The agrochemicals manufacturer through its subsidiary USCL has acquired Kudos Chemie for ₹40 crore. The company has to invest ₹237 crore in Kudos, a specialty chemicals manufacturer, over a period of 2 years as per resolution plan approved by NCLT.
Equitas Small Finance Bank: The private lender said that the Reserve Bank of India has approved its proposal to reappoint MD and CEO Vasudevan P N for one year.
Indian Overseas Bank: The state-owned lender said its board has approved the capital plan for FY23, which includes raising up to ₹1,000 crore by issuing equity shares and another ₹1,000 crore by issuing bonds during the year.
NBCC (India): The state-run civil construction company has secured a total business of ₹330.35 crore during May 2022.
Delta Corp, RBL Bank, Indiabulls Housing Finance: These three stocks will remain under the NSE F&O ban today as their scrip crossed 95% of the market-wide position limit.
Here are the key things investors should know before the market opens today:
Wall Street rallies despite aggressive rate hike
In the overnight trade, all three major U.S. indices closed higher in a relief rally after the Federal Reserve raised its official interest rates by 75 percentage points, to curb the highest consumer inflation in four decades. This was the steepest rate hike since 1994 to contain rising inflation caused by the Russia-Ukraine war as well as supply chain disruption caused by the Covid-19 pandemic.
The U.S. central bank in its policy statement also projected a slowing economy and rising unemployment in the months to come due to interest rate hikes. It also released a statement that estimates rates to go up to 3.4% by the end of the year and 3.8% next year.
Snapping five sessions losing streak, the S&P 500 index ended 1.5% higher, while the Dow Jones index and the Nasdaq Composite gained 1% and 2.5%, respectively.
Asian stocks follow Wall Street higher
Shares in the Asia-Pacific region traded higher in opening deals on Thursday, tracking a strong finish on Wall Street overnight. Traders were relieved that the U.S. central bank raised rates by 0.75% to curb inflation as they were expecting an even bigger rate hike.
Regional heavyweight Japan’s Nikkei 225 was the best performer in the regional market with a 2% gain, followed by South Korea’s KOSPI, which rallied 1.6%. The Straits Times Index in Singapore added 0.9%, Australia’s ASX 200 rose 0.5%, and Taiwan Weighted climbed 0.8%.Bucking the trend, Hong Kong’s Hang Seng fell 0.2%.
In mainland China, the Shenzhen Component and the Shanghai Composite rose 0.6% and 0.3%, respectively, in early trade.
Crude prices rebound
The price of Brent and U.S. crude edged higher in early trade on Thursday after falling up to 1% in overnight trade after the Federal Reserve raised rates by three-quarters of a percentage point to curb inflation. There is fear in the market that the U.S. economy may enter recession due to aggressive rate hike by the Federal Reserve. The market sentiment was further spooked after President Joe Biden asked U.S. refining companies to produce more fuels.
In Asian trading hours, the Brent oil for July delivery rose 0.8% to $119.5 per barrel, while the U.S. West Texas Intermediate (WTI) crude July futures were up 1% at $116.5 a barrel.
FIIs continue selling spree
The foreign institutional investors (FIIs) continued their selling spree in the Indian equity market on June 15, while domestic institutional investors (DIIs) continued to support the market. As per the exchange data, FIIs net sold shares worth ₹3,531.15 crore, while DIIs net purchased shares worth ₹2,588 crore.