InvestorQ : What is your stock market view for Friday 04th November 2022 and why has the Nifty not reacted negatively to the Fed rate hike?
Tisha Malhotra made post

What is your stock market view for Friday 04th November 2022 and why has the Nifty not reacted negatively to the Fed rate hike?

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diksha shah answered.
4 weeks ago
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On Thursday, there was limited impact on the markets, as you rightly pointed out, despite the 75 bps rate hike. Most of the global markets had taken deep cuts due to the rate hike. However, the undertone for Nifty remained negative with the Nifty holding just marginally above the 18,000 mark. Markets took some solace that the Fed pace may gradually reduce.

On Thursday, the rally was led by the banks and consumer plays even as metal and IT stocks continued to drag the indices lower. The advance decline ratio or the A/D ratio was almost neutral at 24:25 and there was not much to read in that. However, for now, with VIX at low levels of around 16, Nifty could hover around these levels with a buy on dips bias.

On Thursday, the foreign investors were net buyers to the tune of Rs.678 crore as domestic funds and LIC sold stocks worth Rs.732 crore. This is a trend that has been visible in the last few days of November. What is more notable is that the FPI sentiments continue to remain positive despite the rate concerns raised by the hawkishness of the Fed.

IN terms of global market cues on Thursday, the Dow Jones Industrial Average was down 147 points while the tech-laden NASDAQ was down 182 points. Both were obviously reacting to the Fed rate hike. Europe was mixed overall amidst the BOE raising rates by 75 bps while the SGX Nifty is down about 29 points, in early trades on Friday.

It must be said that the equity market indices have shown surprising resilience despite the hawkishness of the Fed and the uncertainty around the RBI reaction. It is not just the Fed, but even ECB and BOE have been very hawkish. However, there is pressure at higher levels and the one thing keeping markets up is the low VIX levels which is making a buy on dips bias. Friday could see pressure building up being the last day of the week and a truncated week coming up. Traders should be cautious on long positions or stay hedged.

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