9:30 am FII view: After meeting 30 investors across key financial centres in EU and UK last week, Abhay Laijawala of Deutsche Bank says investors appear to be unanimously positive on India and believe that India offers the best risk-reward within emerging markets (EMs).
He further says the only major deterrent for most investors currently is rich valuations with Sensex trading at 18.3x on FY17, particularly for the favoured sectors such as consumer staples, autos, private sector banks and so on.
“Investors seem to be waiting for better valuations and believe that macro factors such as FCNR (B) redemption or UP state elections which may provide lower entry points,” Laijawala says.
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The market seems to be on fire after the Federal Reserve left US rates unchanged and plotted a lower trajectory for future hikes. The Sensex is up 323.91 points or 1.1 percent at 28831.33 and the Nifty is up 107.10 points or 1.2 percent at 8884.25. About 924 shares have advanced, 99 shares declined, and 32 shares are unchanged.
ICICI Bank, Hero MotoCorp, SBI, Axis Bank and Maruti Suzuki are top gainers while Dr Reddy’s Labs and Infosys.
The Indian rupee gained in early trade on Thursday. It has opened higher by 16 paise at 66.86 per dollar versus 67.02 Wednesday.
Mohan Shenoi of Kotak Mahindra Bank said, “FOMC at its meeting yesterday left the Fed funds rate unchanged even while the case for hiking has strengthened. Bank of Japan has also kept its policy rate unchanged while introducing yield curve control.”
The US dollar extended losses against a basket of major currencies after the US Federal Reserve left monetary policy unchanged and projected a less aggressive rise of interest rates in coming years.
Meanwhile, first quarter current account deficit has narrowed to USD 300 million dollars or 0.1 percent of the GD compared to a deficit of USD 6.1 billion in the same period last year.
Asian shares look set to rise for a sixth straight session. While Tokyo was on holiday on Thursday, stocks were boosted on Wednesday by the Bank of Japan’s shift to targeting a positive yield curve, a move that was considered bullish for banks, insurers and pension funds.
Wall Street racked up gains after the US Federal Reserve kept interest rates unchanged, for now leaving intact the low-rate environment that has helped underpin the bull market. The Nasdaq closed at a record high.
The central bank strongly signalled it could still tighten monetary policy by the end of this year as the labour market improved further. Earlier on Wednesday, global markets reacted to the Bank of Japan’s abrupt shift to targeting interest rates on government bonds to achieve its elusive inflation target.
The Dow Jones industrial average rose 163.74 points, or 0.9 percent, to 18,293.7, the S&P 500 gained 23.36 points, or 1.09 percent, to 2,163.12 and the Nasdaq Composite added 53.83 points, or 1.03 percent, to 5,295.18.
In the world of commodities, crude oil prices were up as much as 3 percent after a surprise drop in crude stockpiles reported by the US government, marking a third weekly decline in the closely watched data.
Gold settled higher, scoring a third straight advance.