Indian shares are likely to open higher on Friday as indicated by futures trade on the Singapore Stock Exchange. Investors will focus on currency movements after Switzerland’s central bank stunned markets by abandoning its long-standing minimum exchange rate against the euro, sending the franc and most European shares soaring while Swiss equities tumbled.
Asian stocks are broadly lower, with Japanese shares bearing the brunt of the selling, pressurized by a resurgent yen, as the Swiss central bank’s unexpected decision to do away with a cap on the country’s currency spurred a flight to safe-haven assets.
Crude prices held steady in Asian deals and base metal prices are mostly lower, while gold is trading near its highest level in four months on speculation that signs of deflation and a slowdown in the world economy will deter the Federal Reserve from raising interest rates too soon.
Closer home, the benchmark indexes Sensex and Nifty soared about 2.6 percent each on Thursday after the Reserve Bank of India in a surprise move reduced the policy repo rate by 25 basis points and left the door open for more rate cuts in the coming months should inflation continue to ease and the government sticks to fiscal deficit targets.
Foreign portfolio investors bought shares worth a whopping Rs.1,738.24 in the cash segment yesterday, while domestic financial institutions offloaded shares worth a net Rs. 527.27 crore, provisional data released by BSE showed. The rupee hit a two-month high of 61.47 against the U.S. dollar before closing up by 12 paise at 62.06 on Thursday.
Meanwhile, India’s trade deficit fell to a 10-month low in December mainly on account of falling imports due to a significant fall in global crude prices and waning investor demand for gold, a government report showed. The merchandise trade deficit fell by over 7 percent to $ 9.434 billion in the month, with imports dropping an annual 4.78 percent while exports fell 3.77 percent year-over-year.
Shares of Tata Consultancy Services could be in focus after the country’s largest software services exporter failed to deliver any surprise in its quarterly results. The IT firm posted a 5.1 percent year-over-year increase in quarterly profit and reported a meager 0.4 percent sequential growth in volumes, disappointing investors.
On the global front, U.S. stocks fell for a fifth consecutive session on Thursday, with the major averages losing between 0.6 percent and 1.5 percent to end at their lowest levels in about a month, as quarterly results from financial giants Bank of America and Citigroup disappointed and the surprise move by the Swiss central bank to strengthen its currency kept investors on edge. Oil prices resumed their slide and data on producer prices, jobless claims and factory activity in mid-Atlantic region painted a mixed picture of the economy, spurring growth worries.
The European markets ended a choppy session sharply higher on Thursday after the Swiss National Bank scrapped a three-year-old cap on the franc, sending the currency soaring and bond yields tumbling. Investors took this as a sign that the European Central Bank would launch a massive bond-buying program next week that will probably weaken the euro further. The German DAX soared 2.2 percent, France’s CAC 40 jumped 2.4 percent and the U.K.’s FTSE 100 rallied 1.7 percent.
In economic releases, the German economy grew the most in three years during 2014 amid record high employment despite geopolitical conflicts and a difficult global economic environment, official data showed.
by RTT Staff Writer
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