Dear Patrons, welcome to the weekly analysis of the Equity Markets. The week gone by has been very volatile. The markets saw wild moves on both sides due to both, local and global events.
Nifty lost almost 160 points or 2% over this week due to global pressure. The week however started on a positive note, on account of the GDP numbers. India's GDP grew by 7.4% last quarter against an expectation of 7%. This resulted into some up move in the Nifty and it touched a high of 7980 this week.
Then came the statement from the FOMC chairperson, and ECB action. We will see one by one.
The Federal Reserve Chairperson indicated that the data is supportive for the Central Banks bid to increase interest rates this month. The final decision on a rate hike is likely to be taken on the 16th December.
The ECB Chief on the other hand cut deposit rates by 10 basis points and made it costlier to deposit money in banks in the EU. He also indicated that the bond buying program will last till March 2017, at the least.
These two events spooked the markets world over, we saw sharp reaction to ECB action in European Markets and almost equally sharp reaction to FOMC statement in the US.
Back home, INR depreciated against the USD, which widened the selling on our bourses. We have been mentioning in this blog for a long time that any increase in Interest Rates in the US will result in to strengthening of the USD, which, in turn will result in out flow of money from our markets. This out flow will be due to sentimental issues and as stated previously the neat RBI policy should help the INR hold its ground.
What do we do?
The time is tricky to say the least. We need to extremely cautious in the markets. We had said earlier that worst case scenario is 7700 on Nifty, however, in the current trend 7700 may not hold and we may see bigger downside. On the weekly charts, Nifty still shows Negative signs and a deep cut is not ruled out.
One needs to be very selective in investing. Accumulation would augur well for investors than buying at one go.
Happy Investing!!!!!!
