Sunday, September 13, 2015

Fed Rate Hike to be out of the way this week

1 of the major drag on the markets have been the timing of the Fed Rate hike. This event would be out of the way this week, at least for next 3 weeks. Let us see how the markets react to this.

1. The shadow of whether the Fed will start hiking interest rates in September or December will be clear this week. If they do hike, then we may witness some knee jerk reaction or if it gets postponed to December then a rally. The fear is if the US starts offering higher interest rates then the money will move out of emerging markets.

2. The second event for September is our own rate cut. 25 basis points is almost factored in and for the markets to have any meaningful reaction, the rate cut would have to be about 50 basis points. I think the RBI Governor will watch the events unfolding in the US this week before making up his mind.

3. Technically, the markets seem to be close to some kind of bottom. either we have already made the bottom or 1 more down move is pending at 7200-7500 levels.

4. The technical picture is we may rise to 7950-8000 before 1 more down move to 7200-7500 or the bottom has already been made. The FIIs continue to sell and have sold stocks worth 6700 crores so far in September. This looks like pausing only once the Fed gives some clarity.

5. The Bihar elections, the results of which are due by November 11th are 1 more key trigger. If the BJP wins then it is a massive boost to the markets. If the BJP wins, the fear is the Opposition will become more aggressive in blocking legislation.

6. I have been getting repeated requests for a follow on series to the Rising Sun theme, so I am proposing to come up with a series of Stocks for the Long Term, a set of 5 to 8 stocks to be bought at current levels (out of these at least 5 would be new picks).

 Please do let me know in case you are interested. My email id is

I plan to close this by tomorrow.

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