Global marts to eye US Fed’s rate hike decision

Sobered by stable global markets and the positive interaction of Prime Minister Narendra Modi with the captains of Indian industry, markets recovered strongly from their 14-month low to close on optimistic note during the week ended.

Snapping their four-week losing streak, the Sensex and the Nifty closed the week 409 points (1.62 per cent) and 134 points (1.75 per cent) higher at 25,610 and 7,789. But negative market breadth reflects skepticism, trepidation and nervousness over the relief rally.

FIIs continued to be sellers while DIIs were seen lending support selectively. Better than expected IIP data and buoyant indirect tax collections suggest that the economy is back on rails.

Inflation data and trade balance numbers hold key to RBI rate cut. The near term direction of markets will depend on CPI data, US Fed meet, rupee movement and FII investment trend. Markets will be closed for Ganesh Chaturti on September 17.

For the forthcoming week, the decision of US Fed with respect to rate hike is going to be the major trendsetter of global equity markets. For the week ahead, chartists predict a trading range of 25,100 and 26,200 for the Sensex and 7,625 and 7,975 for the Nifty. Immediate supports for the indices are at 25,300 and 25,050 and 7,685 and 7,610.

Falling crude and other commodity prices, strong forex reserves, healthy GDP growth, low inflation, moderation of growth in other emerging countries, etc are the major developments that are positive for India.

Accumulate good quality companies that have posted strong growth and PAT from medium to long term perspective. The only thing that matters is what the market thinks. Markets move on probabilities, not possibilities.