Soft opening on cards

The major headlines is that US Fed announced a surprise rate cut of 50 basis points and it’s the first time that the Fed has cut rates by half a percentage point since late 2008. Despite this, US markets ended sharply lower and it clearly indicates that the only thing that worries the market participants is about the slowdown, which could be caused by the growing threat of Coronavirus outbreak. On the domestic front, the focus will now shift on RBI to see if it follows suit of rate cut, especially after RBI governor had given a hint that the central bank was open for stimulus, however, inflation would be a cause of concern. At the time of writing, SGX Nifty was trading cautiously with a loss of 12 points at 11,258 level. The market participants will also focus on Markit Services PMI, which is scheduled to be released today.

Markets in Asia were trading mixed on Wednesday on the back of a sharp fall overnight on the Wall Street as a surprise rate cut failed to lift sentiments. Japan’s Nikkei 225 has added 0.02 per cent, while Hong Kong’s Hang Seng and China’s Shanghai Composite lost 0.86 and 0.36 per cent, respectively.

Back home, snapping its seven consecutive sessions of losses, the benchmark indices registered strong gains on Tuesday. Nifty surged 1.53 per cent to end above 11,300 mark and BSE Sensex rose 1.26 per cent to close at 38,624 level. In the broader market, Nifty Mid-cap and Small-cap jumped 1.99 and 1.48 per cent, respectively. All the sectoral indices ended in green with Nifty Metal and Nifty Pharma climbing over five per cent.

Here is what happened in Western markets, on Wall Street, the stocks surged after an emergency rate cut announced by Federal Reserve to combat Coronavirus slowdown. However, soon, the stocks took a U-turn and a sell-off was seen as bears attacked on the conviction that interest rates will do little to influence a demand tremor caused by Coronavirus. At the end of the day, Dow lost 2.9 per cent, S&P plunged 2.8 per cent and Nasdaq slumped 2 per cent. Meanwhile, European indices ended on a firm note amid Fed’s surprising rate cut.