FED’s rate decision and future guidance met the market expectations. The interest rate was kept unchanged close to zero and FED chairman basically said
- Monetary policy will remain ultra-loose
- FED will do everything to support the asset prices by printing more money
- Buy more US government treasury securities
- Buy up every possible residential or commercial mortgage backed security
Excerpts from FOMC statement:
“To support the flow of credit to households and businesses, the Federal Reserve will continue to purchase Treasury securities and agency residential and commercial mortgage-backed securities in the amounts needed to support smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will closely monitor market conditions and is prepared to adjust its plans as appropriate”
Full FOMC statement is here
PMI for the month of April has started coming out. This will offer a view on how each country have managed their economy in the light of COVID 19. China’s Purchasing Manager’s Index rebounded to 49.4 Vs previous reading of 40 something but still stayed in the contraction zone
Gilead a pharmaceutical company said one of its experimental drugs “remdesivir” is effective in controlling COVID19. This offered a sense of re assurance to global markets.
India fiscal deficit and infrastructure output numbers will be out on this Thursday and Forex reserve position will be out on Friday.
ECB interest rate decision will be announced today. ECB will likely follow FED in reassuring markets and pledging to buy more bonds and securities.
Reliance, Hindustan Unilever and Tech Mahindra will announce their quarterly numbers today.
There has been no major development on the macro front in India. However, markets chose to ignore the fiscal constraints India is facing and go with global markets. SGX Nifty is up more than 1.5% suggesting the up move will continue in Indian markets today
NIFTY -Technical Bias:
Price Action & Pattern:
Nifty decisively broke out of diamond topping pattern yesterday. Therefore, it is more likely to move towards the top of the wedge pattern i.e towards 10K level.
USDINR is the beneficiary of ultra-loose monetary policy of developed countries. USDINR in overseas markets fell significantly overnight suggesting the INR strength will continue in India trading session as well.
A directional strategy such as debit or credit vertical spread is appropriate