InvestorQ : What is your trading outlook for 24th September after the 958 points rally in the Sensex on Thursday?
Debbie Mascarenhas made post

What is your trading outlook for 24th September after the 958 points rally in the Sensex on Thursday?

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diksha shah answered.
3 months ago
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If there was one big beneficiary of the Fed ambiguity in its statement, it was the Indian markets. Bulls interpreted it as a signal that even if the conditions were right, the Fed may not be in a hurry to start the taper or to hike interest rates. This resulted in a 958 point rally in the Sensex and a 276 points rally on the Nifty on Thursday, 23 September.

The rally was predominantly driven by the traditional sectors like financials, metals and capital goods. There was all-round optimism over the Fed statement and the Sensex is now just a stone’s throw from the 60,000 mark having rallied 5,000 points in just 28 days. The Nifty is also fairly close to 18,000 levels and the A/D ratio was robust at 4:1.

Foreign investors were net buyers on Thursday making purchases of about Rs.358 crore of equities. This was actually boosted by the domestic net purchases in equities of Rs.1,173 crore. However, the numbers were fairly tepid compared to the size of the rally on the indices hinting at bouts of short covering after the ambiguous Fed statement.

One of the big triggers for the Sensex and Nifty was the strength in Dow futures and the Dow ended up rallying more than 500 points on Thursday. The NASDAQ was up 105 bps. In Europe, the CAC and DAX were 100 bps higher while FTSE was flat on static rates. SGX Nifty is flat in early trades but we could see frenetic buying in any dips.

Overall, this remains a buy on dips market and the 958 points rally may bring some psychological caution at higher levels, nothing much. The VIX has been stable at around 16.6 hinting at a lot of Nifty options action. However, till the Fed does not get aggressive on the taper or on rate hikes, risks are fairly limited.

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