17 December 2015


The markets had factored this (Fed hike) in, the Santa rally which we had predicted is now happening. Historic interest rate hike by US Federal Reserve cheered Dalal Street after the Fed Chief Janet Yellen signalled any further hike will be gradual. The US central bank's policy-setting committee raised the range of its benchmark interest rate by a quarter of a percentage point to between 0.25 % and 0.50 % ending a lengthy debate about whether the economy was strong enough to withstand higher borrowing costs.
On the short term outlook, we sense that broader markets will breathe a sigh of relief as investors will learn to live with the moment of truth. Markets will derive reprieve from the fact that the subsequent rate hike is not imminent. Traditionally, US GDP economy registers feeble growth during the first quarter, as inhospitable weather proves to be a drag on inventory accumulation and retail sales. This implies that Fed will take a quarter or two to assess the real impact of first rate hike before resuming the path of further policy normalization. Imperatively, a pause on the rates during the first half of 2016 cannot be ruled out. The Indian equity market ended at two week high on Thursday with the NSE Nifty re-conquering the 7800 mark. Indices extended winning streak to fourth consecutive trading session after the US Federal Reserve raised interest rates for the first time in nearly a decade and signalled its tightening cycle would be “gradual.” Rally was not only seen in India but across the globe as the Asian and European markets too surged higher.
In a volatile trading session, the S&P BSE Sensex extended gains for the fourth straight session on Thursday to end 309 points higher, while the broader CNX Nifty settled the day just a tad below key 7850-mark. After moving in a tight range till noon, markets suddenly gained pace and started moving higher; taking some encouragement with Fitch Ratings’ statement that India is better placed than many of its peers after the US Federal Reserve raised its key interest rates.  The BSE Sensex and NSE Nifty extended gains for the fourth consecutive session on Thursday after the US Federal Reserve raised interest rates for the first time in nearly a decade and signalled its tightening cycle would be gradual. Sensex closed 309 points up at 25803, while NSE Nifty settled 93 points up at 7844. But directionally we see 2016 being a down year for the markets, there's no major trigger in terms of corporate earnings.
A gap up open was followed by further upswing and it closed the day in the green though off the high of the day. The 7870 - 7890 region is currently an important supply zone and needs strong buying support to be decisively crossed which will lead to fresh upswing. On the downside, 7770, 7740 is an immediate support but the key support is 7690. The downswing will gather fresh momentum if this support is breached decisively.
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Resistance: 7860, 7890, 7920
Support: 7830, 7800, 7770

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