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Will the Indian market withstand the Fed’s moods?

All eyes will be on the Federal Reserve when it meets tonight to decide on its monetary policy strategy for the near term.

All eyes will be on the Federal Reserve when it meets tonight to decide on its monetary policy strategy for the near term.

Analysts widely expect the US central bank to raise interest rates in June – for the first time in about eight years – a move that could send the already-strong US dollar rising even more and rattle emerging market currencies and stocks.

In an interview with CNBC-TV18, OPC Asset Solutions executive chairman Ajay Bagga said the market could witness a sharp collection were the Fed to indicate today it may hike rates at its June meeting.

“The Bank of International Settlements (BIS) has said about USD 3 trillion of emerging market dollar denominated debt could be at risk,” he said.

But Mehraboon Irani of Nirmal Bang Securities said that the Fed hiking aggressively is not likely given the low inflation conditions that have existed for years now in the US economy. “Even if it does hike, it will be an event that will go by.”

“The thesis for the Indian market remains that: buy at lower levels.”

Technical analyst Sudarshan Sukhani said that 8,620 remains a key support and if the Nifty breaks it tomorrow, “we should believe an intermediate top for many months has been made.”

If the Nifty crosses 8,750, however, traders could initiate a fresh long on both the Nifty and the Bank Nifty.

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