Indian shares may open flat to slightly higher on Monday after the U.S. Federal Reserve pledged to keep interest rates at exceptionally low levels at least through late 2014. The central bank previously indicated that it planned to keep rates at near-zero levels through at least mid-2013.
It is expected that the Fed's extension of the timeframe of its ultra-loose monetary policy will spur demand for emerging market stocks and currencies. Asian markets are trading mostly higher this morning notwithstanding mixed economic data from the U.S. Markets in China and Taiwan remain closed for the Lunar New Year holidays.
Closer home, benchmark indexes Sensex and the Nifty climbed around 10 percent each thus far in January as foreign institutional investors stepped up buying, encouraged by some softening in headline inflation and easing worries over Europe's debt crisis. Against this backdrop, the market needs to consolidate a little bit before resuming the uptrend.
U.S. stocks ended lower overnight, as a report showing an unexpected drop in new home sales and a rise in initial jobless claims last week overshadowed upbeat data on durable goods orders in December. The Dow slipped 0.2 percent, the Nasdaq lost half a percent and the S&P 500 shed 0.6 percent.
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