Equities set for gains tracking dovish US Fed, China’s disinflation export
Bombay Stock Exchange (Image credit @BSE)
Sensex set for strong opening amid positive global cues
By S Jha
New Delhi, April 4: The US Federal Reserve Chairman Jerome Powell reiterated last night that rate cuts are indeed on cards this year. The US equity markets erased losses during the day after Powell’s remarks. The Asian equity markets are trending higher. The Indian indices are also set for gains amid global positive cues.
Realty and gold prices are strengthening. Both have been reacting to the anticipation of the rate cuts. The European Union is already on the rate cut course. The market participants claim that the US Fed rate cuts will once more unleash a fresh wave of funds flowing into the equity, realty, and gold segments.
Nifty has so far made at least three attempts to go above the 22500 level. The index is set to scale the barrier on the opening itself in the Thursday session. The day also happens to be a weekly expiry for the index.
The market participants claim that there may be a scope for short-covering as well in the index. If it indeed happens, there could also be a possibility of a major uplift in the bullish sentiments.
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It may be noted that the Nifty for the past few days have been trading in the range of 21850-22500. A breach of the range on the upper side can create a new higher zone for trading, claim the market participants.
The global equity markets are also trending higher due to cooling off of inflation. The core inflation in India also remains subdued. Experts attribute the global cooling off of prices to a major expansion in exports by China at discounted rates.
There are suggestions in some quarters that China is exporting disinflation. China in the last couple of months has been trying to convince the world that it still is the global engine.
Some of the rivals of China are also being seen stepping up imports from Beijing. They hope that cheap Chinese imports may help boost their economy. Also, the inflation firmly comes under check with the help of the Chinese export of cheaper goods.
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The cooling off of inflation is also bringing good tides to prices of gold. The precious metal price has risen by almost 10 per cent in a month. Gold is now commanding more than Rs 7100 for 24 carrots for 10 gram. Similar action is being seen in the share prices of the real-estate companies.
(Disclaimer: This article makes no recommendation for buy or sell of shares of any company)
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