What is your view on stock markets on 06-January after the 4 day rally? Do you think the fall in US markets will impact markets on Thursday?

On Wednesday, the Nifty and the Sensex continued their rally and the Sensex has now rallied nearly 2,500 points in the last 4 trading session. The Nifty continued its rally for the fourth day in succession but this could be nipped by Fed Minutes, which were a lot more hawkish than expected. That is likely to keep the pressure on markets on Thursday.

In terms of the market structure on Wednesday, Nifty gained another 120 points on 05-Jan while the advance decline ratio was strongly positive at 33:17. However, the caution in the markets was evident from the fact that the India VIX rallied higher to 17.23 levels. Financials like Bajaj Finance and Kotak Bank were among the big gainers on Wednesday.

Foreign investors again were net buyers in equities worth Rs.337 crore while domestic funds and LIC bought stocks worth Rs.1,272 crore on the 05th of January. There is some slowing of FPI flows but global markets did come under pressure with NASDAQ losing over 3.3% and the Dow lower nearly 2% due to an overtly hawkish Fed policy minutes.

Finally, let me come back to your query on outlook for markets. The big story is going to be the Fed minutes. The Fed is now hinting that rate hikes may begin as soon as March when the taper is done and dusted. That would put a lot of pressure on the RBI in the February policy considering that it also needs to sustain growth momentum amidst Omicron risk.