The markets digested 2 events of the Central Banks of the US and the RBI coming out with policy pronouncements. Let us see what they mean for the markets.
1. The US Fed has started slow tapering of the bond purchases from January. The markets did ot show any major negative reactions because it was reduced only by 10 billion USD and the Fed softened the blow by saying that the low interest rates regime is here to stay.
2. The tightening of the monetary policy means that the party for Gold is over unless there is some major event like a geopolitical event. Gold peaked at 1920 USD some time in September 2011 and has been on a downward spiral ever since. Now it is trading at 1200 USD. The price of Gold in rupee terms increased because the rupee has weakened by about 20 pc since September 2011. The exposure to Gold can be reduced and no further Gold should be added to the portfolio.
3. The RBI has held rates becuase the inflation has been primarily been due to the food inflation. This is expected to come down in December and Januray and hence the rate hike has been deferred till the ext policy meeting in mid-January.
4. The markets rose on the RBI decision to hold the rates, took a momentary dip on the US Fed decision but then smartly rose on Friday.
5. The 6350-6360 remains a key resistance level for the markets to overcome. Once, this is broken and the 6415 previous highs are surpassed, once can expect the markets to rise. The targets remain of 6500-7000. The markets are entering the holiday season and one can expect lacklustre activity going forward.
6. The coming week is a truncated week on Wednesday being a Christmas holiday and expiry being on Thursday which can lead to volatility.
It is time to enjoy the Holiday season and maybe look for trading bets.
1. The US Fed has started slow tapering of the bond purchases from January. The markets did ot show any major negative reactions because it was reduced only by 10 billion USD and the Fed softened the blow by saying that the low interest rates regime is here to stay.
2. The tightening of the monetary policy means that the party for Gold is over unless there is some major event like a geopolitical event. Gold peaked at 1920 USD some time in September 2011 and has been on a downward spiral ever since. Now it is trading at 1200 USD. The price of Gold in rupee terms increased because the rupee has weakened by about 20 pc since September 2011. The exposure to Gold can be reduced and no further Gold should be added to the portfolio.
3. The RBI has held rates becuase the inflation has been primarily been due to the food inflation. This is expected to come down in December and Januray and hence the rate hike has been deferred till the ext policy meeting in mid-January.
4. The markets rose on the RBI decision to hold the rates, took a momentary dip on the US Fed decision but then smartly rose on Friday.
5. The 6350-6360 remains a key resistance level for the markets to overcome. Once, this is broken and the 6415 previous highs are surpassed, once can expect the markets to rise. The targets remain of 6500-7000. The markets are entering the holiday season and one can expect lacklustre activity going forward.
6. The coming week is a truncated week on Wednesday being a Christmas holiday and expiry being on Thursday which can lead to volatility.
It is time to enjoy the Holiday season and maybe look for trading bets.
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