Indian equity benchmarks opened higher on Friday and are on track to extend their weekly gains for the fifth consecutive week, even as the US Federal Reserve’s policy path continues to be debated.
The NSE Nifty index and the 30-share BSE Sensex index opened in the green for the second day in a row, breaking the broader global bearish trend.
In early trade, the Sensex index rose 113.2 points to 60,411.20 and the Nifty gained 35.7 points to open at 17,992.20.
Indian equity benchmarks extended their bull run for the fifth straight week, with Sensex and Nifty indices ending at more than four-month highs on Thursday.
Tracking the recent rally in equities, the market capitalization of BSE-listed firms touched a new record high of ₹2,80,52,760.91 crore on Thursday. Earlier on January 17, the market capitalization (m-cap) of companies listed on the BSE had touched an all-time high of Rs 2,80,02,437.71 crore.
Even as Asian markets were left in limbo on Friday as a recession clouded Europe, the US dollar made all the moves, highlighting the relative strength of the US economy.
MSCI’s broadest index of Asia-Pacific equities outside Japan fell 0.3 per cent to 1.1 per cent in the week, as fresh concerns emerged about the health of China’s economy.
South Korea lost 0.5 per cent, while blue chips in China remained unchanged. Japan’s Nikkei outperformed, rising 0.3 percent, partly due to the yen’s continued decline.
The “R” alarm is sounding in Europe, where natural gas prices hit an all-time high on Thursday, raising the pulse of inflation, which will undoubtedly strengthen more painful policy and increase the likelihood of a recession.
London’s FTSE futures rose 0.2 per cent while Europe’s Eurostox 50 futures fell 0.1 per cent.
After repeatedly failing through the 200-day moving average, S&P 500 futures fell 0.1 percent and were barely changed for the week, while Nasdaq futures fell 0.2 percent.
At least four US Federal Reserve officials warned that interest rates still have to be worked out, with the main difference being how fast and higher to go. This raised the possibility of rising borrowing costs in the markets.
Market expectations point to a half-point increase for September and a one-three possibility of 75 basis points (bps). Rates are projected to peak at 3.5 percent or more; However, some Fed members are pushing for 4 percent or more in this tight cycle.
Brian Martin, head of G3 economics at ANZ, told Reuters: “There is no indication that labor market or inflation data is slowing enough for the Fed to declare victory over inflation.”
“We see upside risks to the Fed’s inflation projections, and we expect to revise these and the dot plot in September,” he said. “We have revised our year-end fed funds rate forecast by 25 bps to 4.0 percent and now expect three 50 bps hikes in the remainder of 2022.”
All this underscores the importance of Fed Chair Jerome Powell’s address in Jackson Hole on August 26, which is often a historic occasion on the central bank calendar.
With two-year yields 34 basis points lower than 10-year yields and bearish indicators blazing, the bond market is unmistakably on the hawkish side.
Oil prices were slightly stable on Friday but were still down in the week, with Brent touching its lowest level since February on concerns about demand.
Brent was up 2 cents to $96.61, while US crude rose 5 cents to $90.55 a barrel.