Commodities pack as a whole is positive today with precious metals up by around 1.5 and 2 percent while Crude oil is up by 1.2 percent and most of the base metals are higher by half a percent. The keenly awaited outcome of the US FED is done with and they have hiked the rates by 25 basis points, however, the tone of further rate hikes being gradual is what markets have taken seriously.
Commodities were recently being hammered and now changed its course and turned positive. However, the base metals pack have its own fundamentals of supply side issues driving prices while higher crude oil inventories in the US dominates the oil market sentiments.
It is too early to say though, fundamentals have changed, however a note of caution for traders as the momentum can anytime fade in either direction. Uncertain times still remain with European elections that will decide further course for commodities as an asset classes.
The way Indian markets are trending right now, it’s quite evident that markets are positive on Narendra Modi’s Ministry. Since the remarkable win of BJP in the major state election and substantial gains made in other states, the Indian Rupee has appreciated by 1.57 percent and is still trading higher at 65.36 levels while writing. The thumping victory has brightened the outlook on economic reforms planned by the Modi government, inviting huge foreign inflows into equity/debt markets.
Another reason for Rupee’s stark appreciation is the dovish stance detected in US Fed Chair’s speech held on 15th March 2017. She raised interest rates but refrained from signalling a faster pace of tightening this year despite robust economic datasets from the US and probable increase of fiscal stimulus by the Trump administration. Markets were disappointed by this move and instead chose to invest in risky assets which kept the US Dollar Index pressurized which worked in favour of rupee. This buoyancy is expected to continue for some time which will push USDINR spot higher towards 64.80 mark in the near term
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