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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.

  • Anonymous says:

    >hello Deepak,

    I see that most of the top stocks, barring a few (such as Rel Comm) have more offers than bidders. Could this mean an imminent downturn due to selling pressure? Or does it just mean a flat Sensex for the near term?

    regards,
    Karthick

  • Raj says:

    >Hi deepak,

    Just an offbeat question, not related to the current thread.

    SRF has been making interesting moves and is currently trading at 191..Is it due to more positive news on the carbon trading space for india, which in turn will help SRF..or due to some other reason..
    Are you still tracking this stock?

  • Anonymous says:

    >It is dangerous to hazard a guess as to which way the market will move.

    On one hand, Fed rates cuts are not having much impact on the Global Liquidity Crisis.
    Banks not trusting and lending to each other. Further, more housing foreclosures and loss of wealth effect of US consumers spells danger for exporting economies of Asia (China).

    On the other hand, India story seems to be pulling more of International investors who see Emerging Markets as a safe haven. Some say India may even benefit from US problems.

    On balance it seems the best strategy may be to stay put in the market without making futher fresh investments.

  • AKAK says:

    >Hi Deepak

    What time horizon do you trade in?
    Are you more like a day trader or you keep your positions open for weeks or months?