Mumbai: The markets opened higher on Thursday despite weak global cues post the Federal Open Market Committee (FOMC) meet. The Sensex is above 30,000 and the Nifty is hovering around 9,350.
As largely expected, the US Federal Reserve kept its interest rates unchanged after its two-day meet concluded on Wednesday night but said that weak economic growth in the first quarter is likely to be “transitory”.
Prakash Diwan, director at Altamount Capital Management, said that the Indian markets are unlikely to react to the Fed decision. “It’s a non-event for India,” he added. The Indian markets are on a tear after hitting record highs in April. The Sensex has gained 12.27%, while the Nifty has jumped 13.76% so far in 2017.
Asian markets were mostly lower on Thursday on US Fed’s statements, while the US markets closed slightly down.
Meanwhile, the Fed also indicated that despite growth slowdown in the first quarter, it may raise rates two more times this year. At its last meeting in March, the Fed had raised its benchmark rate by a quarter percentage point to a target range of 0.75-1%.
The dollar index, which measures the greenback against a basket of currencies, has also jumped. The US dollar index climbed near 99.3 levels on Thursday, adding to Wednesday’s 0.2% gain.
The strength in US dollar has put pressure on commodities at large. Gold prices have slumped as low as $1236.03/oz, while crude and industrial metals are trading largely lower.
“Fed’s optimism about US economy kept June rate hike expectations alive and this pushed US dollar higher. Market focus will now shift to US non-farm payrolls data tomorrow (on Friday) and the second round of French Presidential elections on May 7. Also in focus will be comments from various Fed officials on Friday,” Kotak Commodities said.