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Dec 14 2017

Rupee higher as Fed leaves rates outlook unchanged

Financial Market Overview

14th December, 2017

Morning Coffee:-                                                                                  

MARKETS AT OPEN:-

Rupee:-

  • Indian rupee edged higher against the dollar, after the U.S. Federal Reserve hiked interest rates as expected, but stuck to its projection for three increases next year amid subdued inflation in the world’s largest economy. Pair USDINR now at  64.27 against. 64.43 at the previous close.
  • India’s current account deficit totaled $7.2 billion, or 1.2% of gross domestic product, in the second quarter of this fiscal year, data from the Reserve Bank of India showed yesterday. The print sharply widened from $3.4 billion, or 0.6% of GDP, in the year-ago quarter, but narrowed from $15 billion or 2.3% of GDP in April-June.
  • Pair to tip in range between 64.20-64.40 today.

Indian Equities:-

  • Equity benchmarks rebounded with mild gains in opening on Thursday after Federal Reserve expectedly hiked interest rate by 25 bps. Investors remained cautious ahead of exit polls after the second phase of Gujarat elections today.
  • The 30-share BSE Sensex was up 46.73 points at 33,099.77 and the 50-share NSE Nifty rose 18 points to 10,211.
  • Vedanta, ONGC, GAIL, HPCL, Tech Mahindra, Dr Reddy’s Labs, Aurobindo Pharma, Infosys, Hero MotoCorp and Ambuja Cements were early gainers while TCS, IndusInd Bank and Maruti Suzuki were losers.

Global Markets:-

  • Vedanta, ONGC, GAIL, HPCL, Tech Mahindra, Dr Reddy’s Labs, Aurobindo Pharma, Infosys, Hero MotoCorp and Ambuja Cements were early gainers while TCS, IndusInd Bank and Maruti Suzuki were losers.
  • S Markets finished mixed on wednesday. The Dow Jones Industrial Average rose 80.63 points, or 0.33 percent, to end at 24,585.43, the S&P 500  lost 1.26 points, or 0.05 percent, to 2,662.85 and the Nasdaq Composite  added 13.48 points, or 0.2 percent, to 6,875.80.
  • European markets finished lower yesterday with shares in France leading the region. The CAC 40 is down 0.51% while Germany’s DAX is off 0.44% and London’s FTSE 100 is lower by 0.05%.
  • The dollar index, which measures the greenback against a basket of six major rivals, ended at a one-week low, dropping 0.7%, after disappointing consumer inflation data raised concerns that the Federal Reserve may effect fewer rate increases next year. Data released by the labor department showed U.S. consumer prices rose 0.4% last month, following a 0.1% increase in October and in line with economists’ expectations. The CPI rose 2.2% on year in November from 2.0% in the previous month.  However, the core inflation increased 0.1% last month and 1.7% on year from a 0.2% rise in October and 1.8% on yearly basis.
  • The Federal Reserve raised interest rates on Wednesday for a third time in 2017, in line with expectation, but left its rate outlook unchanged for coming years even as policymakers predicted a short-term rise in U.S. economic growth owing to the Trump administration’s proposed tax cuts.
  • The outgoing Fed chair Janet Yellen said the continuous shortfall of inflation from the Fed’s 2% goal was the major piece of “undone work” as she leaves for Powell to figure out. Jerome Powell, chosen by U.S. President Donald Trump, will lead the Fed after Yellen’s term ends in February 2018.