US EQUITIES SURGE ON DOVISH FED; NIFTY TO GIVE 34-DMA TEST YET AGAIN

US EQUITIES SURGE ON DOVISH FED; NIFTY TO GIVE 34-DMA TEST YET AGAIN

WORLD MARKETS                             

US indices climbed between 0.9%-1.3%, cheering the Federal Reserve's statement that indicated a rate hike would come later rather than sooner.

The Fed, in a statement after its two-day meeting, dropped an assurance that it would remain “patient” before acting on rates. The central bank however said that it won't tighten policy until it is "reasonably confident" inflation will return to its target and the labor market improves further. Also Fed officials lowered their estimate for where the federal funds rate will be by end-2015 to 0.625% from a December forecast of 1.125%, suggesting that interest rate hikes would be quite gradual.

“Just because we removed the word patient from the statement doesn’t mean we are going to be impatient,” Ms. Yellen said in a postmeeting press conference.

Dollar index fell 2% to 97.67, suffering its worst daily drop in six years, with euro climbing above $1.09. US 10-year yield fell to 1.93%. Nymex oil rose $1.46 to $46.65 a barrel. Brent soared 4.5% or $2.40 to $55.91.

European markets ended mixed. FTSE climbed 1.6% on an increased economic growth forecast of 2.3% for the United Kingdom, as finance minister George Osborne also signaled plans to scale back austerity measures. Germany and Italy lost 0.5% and 0.7% respectively while France ended flat.

AT HOME

Benchmark indices ended lower by four tenth of a percent after a choppy trading session. Sensex lost 114 points to settle at 28622 while Nifty finished at 8686, down 37 points. BSE mid-cap and small-cap indices however gained 0.3% each. BSE Power and IT indices lost the most among the sectoral indices, losing 1.1% and 0.9% respectively while Oil & Gas index and Bankex gained 0.7% and 0.5% respectively.

FIIs net sold stocks and index futures worth Rs 457 cr and 525 cr respectively but net bought stock futures worth Rs 1311 cr. DIIs were net sellers to the tune of Rs 883 cr.

Rupee appreciated 1 paise to end at 62.69/$.

Rajya Sabha Select Committees on Mines and Minerals Amendment Bill and Coal Mines Bill yesterday recommended their approval without any change.

OUTLOOK

Today morning Nikkei is down nearly a percent as the yen has strengthened Vs the dollar. Other Asian markets are trading with gains in the vicinity of half a percent and SGX Nifty is suggesting about 60 points higher opening for our market.

After today's gap up opening, Nifty would be closer to the 34-DMA placed around 8770, a  crossover of which would pave the way for the further upside till about 8925, which is the 61.8% retracement level of the recent 9119-8612 fall. 8600 continues to be important support on the way down.