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Commentary

Fed cuts rates by 25 bps

The US Fed has cut the fed funds rate by 0.25% and the discount rate by the same amount. This has been taken to mean larger inflows to India but I think the move was expected and may actually be a disappointment with expectation for 0.5% being higher.

The Indian market is making all time highs. This is quite the opposite of Aug-Sep, when the fed did MORE than expected, and our market was not moving at all. Will this trigger a breakout? I would imagine so – and it could be on the upside or the downside, but if it goes up now, please note the volumes – they should be increasing dramatically, or we don’t have the real deal.

And I’d wait out the week, before taking action, instead of working on sentiment tomorrow. I’m still short the market, because again, the odds are better if the market moves down, though in the next two days if we don’t see a downside it may be time for me to cover the losses. Very interesting times indeed.

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