Market To Rebound Strongly Once Dust Settles Down

We, at Dalal Street Investment Journal, are consistently advising our readers about the buying opportunity available in the market due to current market correction. We are absolutely sure that the recent free fall in the market is not at all a bear market but a healthy correction in overall bull market. And this market correction should be used as accumulating opportunity by wise investors. The Indian equity market barometer Nifty found strong support at level of 7500 – 7600 and rebounded after touching its recent low of 7546 during intraday on September 7, 2015. However, the near future for the market will be very volatile as various key events are lined up over one month.

Meanwhile, global markets showed some respirator from the recent correction and showed marginal gains during last couple of weeks. The American equity market barometers were up by 2 to 4 per cent over a good macro economic data. Though the European markets showed relatively lower gains, the Asian markets showed mixed reaction with Singapore market recovery. But the Japanese market showed marginal slide of 0.4 per cent and Chinese markets showed huge slide of 4.9 per cent showing no signs of recovery despite of considerable stimulus by Chinese government. While our domestic market showed recovery of more than one percent during the same period. Almost all the sectoral indices except IT and FMCG showed handsome recovery during the same period.

However, a huge volatility has been created due to the forthcoming US FOMC meeting scheduled on 16 and 17 September as the talks about the interest rate hike by US Federal Reserve heightened at the record levels. The US Federal Reserve has consistently been mentioning about its first ever rate hike after a decade if supported by the favourable macro economic data. For last month, the macro economic data were coming as per Fed’s expectation and hence the rate hike possibilities have increased remarkably. Though there are 90 per cent chances that the US Fed will increase the policy rate later in the year, a huge volatility has created across the emerging markets due to concerns over foreign institutional investors (FIIs) investment outflow.

Meanwhile, the fall in August WPI inflation, which shrank further to (-)4.95 per cent against (-)4.05 per cent in July gave a renewed impetus to calls for a rate cut by the Reserve Bank of India in its next bi-monthly policy meet on September 29. The CPI inflation too came lower at 3.66 per cent for August compared to 3.78 per cent in July Also, industrial production expanded at better-than-estimated 4.2 per cent in July this year compared to the same month last year as manufacturing activity and offtake of capital goods improved. The crude oil too is trading at USD 40 per barrel and expected to touch USD 20 per dollar in near future as per Goldman Sachs. Hence we see indisputably minimal pain for the domestic economy and the market will show handsome recovery after the dust settles down.