Positives:
Market expectation that FED will not do anything to damage the record setting rally
US & European markets are close to all-time highs
USD Index continues to trend lower.
Asian markets are trading mostly in positive territory this morning
Negatives:
Uncertainty surrounding FED policy decision and economic forecast due tonight
DIIs profit booking continues
FIIs purchases are moderating
Global Markets: -Consolidating and on the guard
After record setting rally, European and US markets consolidated for second day while awaiting FED policy decision that is due tonight. The sharp rally was originally caused by the massive stimulus from US and European central banks and governments. Therefore, markets are obviously nervous about the upcoming FED decision. Market expectations from the FED meeting are:
FED will continue to calm the markets
Will promise near zero rates will continue for long time
Its economic forecast will be down beat
However, economists are also concerned about money printing and are looking for hints from Federal Reserve about how far they will go in buying the debts. Expectations about negative interest rates seems to have vanished. Global market direction is dependent on what FED will do tonight.
ASIAN Markets this morning: - Mostly Positive
Asian markets are trading mostly trading in positive territory this morning except for Chinese markets. SGX Nifty is trading about 50 points above yesterday’s Nifty close.
Calendar events
Import, Export and Trade balance numbers will be released tomorrow after market closes. FED policy decision that is most important event for global market right now will be released by tonight.
India: How strong is Nifty?
Indian markets had been raising on the back of global risk-on mood. Otherwise there were no positive local triggers. Therefore, the FED policy decision assumes much importance for Nifty as well. FIIs purchases are moderating while DIIs continue to book sizable profit. Advance decline ratio for broader market turned negative yesterday.
Where will Nifty go today?
Market is expected to be nervous today, the direction of European markets and US futures later in the day may add to the volatility. My view is that FIIs would not turn away from Indian markets for now and DIIs may not push the Indices down too far while booking their profit. Therefore I expect Nifty to be range bound with bouts of volatility today.
Result announcement:
Century Tex will declare its results today.
NIFTY -Technical Bias:
Price Action & Pattern:
Consolidation in the Nifty will continue as DIIs are still booking profit. At the moment there is no danger for Nifty to go below 9950/9900 while uncertainty over FED decision is likely to keep the upside limited to 10300. However implied volatility would raise.
Trade Ideas:
Spreads that benefited from raise in volatility could be exited at appropriate time today and wait for clear direction of markets for further trade.
Market traded in tight range closed at top of range and volatility increased