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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