Market to head higher following Fed rate cut

The market is expected to head higher on positive cues from US markets. Profit booking cannot be ruled out in the second half of the day’s trading session.

The US Federal Reserve cut interest rates by a quarter percentage point to 4.5% yesterday, 31 October 2007 as widely expected. US markets advanced yesterday, 31 October 2007, after the Federal Reserve moderated some of investors fears about a sinking economy, stating that risks to the financial markets from the subprime crises have eased. The Dow Jones industrial average gained 137.54 points, or 1%, to 13,930.01. The S&P 500 index surged 18.36 points, or 1.20%, to 1,549.38, and the Nasdaq Composite index rose 42.41 points, or 1.51%, to 2,859.12.

Asian markets were trading mixed today, 1 November 2007. Hong Kong's Hang Seng (up 0.78% at 31,598.43), Japan's Nikkei (up 0.75% at 16,863.83), Singapore's Straits Times (up 0.47% at 3,823.66) rose. However, Taiwan's Taiwan Weighted (down 0.51% at 9,661.43) and South Korea's Seoul Composite (down 0.35% at 2,057.69) slipped.

US crude oil prices surged over $1.60 to hit new record high of $96.21 on Thursday, 1 November 2007. The gains followed an unexpected sharp fall in US crude stocks, strong US economic data and further losses for the dollar after the Federal Reserve cut interest rates by a quarter percentage point.

As per provisional data, FIIs purchased shares worth a net Rs 198.74 crore, while domestic institutional investors (DIIs) were net buyers of shares worth Rs 444.25 crore on Wednesday, 31 October 2007.

The 30-share BSE Sensex rose 54.48 points, or 0.28%, to 19,837.99, on Wednesday, 31 October 2007. The broader based S&P CNX Nifty was up 31.9 points, or 0.54%, to 5,900.65 on that day.

Good Q2 September 2007 results and FII buying aided a solid surge on the bourses in October 2007. The BSE 30-shares Sensex gained 14.73% to 19,837.99 in one month to 31 October 2007.