Can FIIs resume buying this mth?
image for illustrative purpose
Even though the pause decision of the US Federal Reserve was on the expected lines, the commentary was not Hawkish as the market feared, says VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Fed chief Jerome Powell’s comment that despite elevated inflation, the longer term inflation expectations remain well anchored was taken by the market as a slightly Dovish statement.
The implication of this statement is that the Fed may not hike rates again in this rate hiking cycle. Consequently the bond yields declined sharply. The benchmark 10-year bond yield declined 17 bp to 4.75 per cent and the equity markets responded positively, he said.
In the near-term, the dollar index at 106.3, Brent crude at around $85 and the 10-year US bond yield at 4.75 per cent are favourable for stock markets. There is a possibility that the FIIs, which were sustained sellers in October may turn buyers and if that happens, short-covering can take markets higher despite the uncertainty surrounding the Israel-Hamas conflict, he added.
