US Fed decision to set the tone for markets

Buoyed by optimism over a potential rate cut by the US Federal Reserve next month, stability in Japanese Yen and lower CPI & WPI inflation data; the domestic stock markets closed on a strong note during the week ended. BSE Sensex rose 1,331 points, or 1.7 per cent, to 80,436 points, while NSE Nifty gained 397 points, or 1.7 per cent to 24,541 points. Nifty Midcap-100 index was up 0.84 per cent and Smallcap-100 index gained 0.14 per cent. Expect the rupee to trade with a slight negative bias on geopolitical tension in the Middle East between Israel and Iran. Oil prices, which remain critical for markets with their impact on inflation and on the rate trajectory of global central banks including India's are locked in a range for last few weeks. Higher crude oil prices do not augur well for the equity markets, fuelling inflation fears. Despite the mixed sentiments in the secondary market, the primary market continues to be robust. In the upcoming week, four companies are gearing up to launch their IPOs including two in the main board segment.

Listing gains in Ola Electric has rekindled the speculative fervour in IPO listings. During the week ended, the US stocks capped off their best week of the year in a head-spinning turnaround that defied recent concerns about rising recession risks. Buoyed by a surprising streak of encouraging economic reports, the S&P-500 gained 3.9 per cent, the Dow Jones Industrial Average climbed 2.9 per cent, and the Nasdaq Composite advanced 5.3 per cent. It was the biggest weekly gain for each major index since last November. This sentiment was driven by better-than-expected US inflation data, retail sales figures, and jobless claims. All eyes next week will now be on US Fed meeting minutes and speech by the US Fed Chair Jerome Powell at the three-day Jackson Hole Economic Symposium in the coming week.

Don’t despair amid the inevitable setbacks that all investors face, especially during a crisis in the market. If the reasoning behind the investment was sound, stick with it, and it should eventually turn around.

F&O/ SECTOR WATCH

Last week was a roller-coaster for markets, driven by a complex interplay of economic indicators and geopolitical factors. Remarkable recovery over the weekend triggered brisk trading including short covering in the derivatives segment.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)