The recent rally off the back of speculation that central banks were about to lend their support to markets wasn’t unfounded as Mario Draghi practically wrote a blank check and the PBOC surprised markets with their support in the form of a rate cut.
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“We will be particularly attentive to ECB policy makers” who “most strongly resist more aggressive policy accommodation”, said Michael Michaelides, a fixed-income strategist at Royal Bank of Scotland Plc in London. “Any stronger hints as to what way monetary policy will be reexamined”.
The US Fed will decide whether to raise rates during its Federal Open Market Committee (FOMC) meet on October 27-28.
Draghi all but promised on Thursday to ease monetary policy at the ECB’s next rendezvous by committing to be “vigilant”, invoking his predecessor Jean-Claude Trichet’s preferred signal for imminent action. The Fed is now expected to start hiking interest rates sometime in early 2016. “Unlike the last two quarterly results season, when the markets approached with an optimistic stance, this time around there was caution and anxiety”, Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
Pankaj Sharma, equities head with Equirus Securities pointed out that increased foreign funds inflow boosted the Indian equity markets.
But the latest data “did not confirm this”, Mayr said.
Major firms like Maruti, TVS Motor, Axis Bank, Sesa Goa, Lupin, Dabur India, Sun TV Network, Bharat Forge, Crompton Greaves, Areva, Dr.Reddy’s, Glenmark, NTPC, ICICI Bank, Kotak Mahindra Bank, IDFC, and GSK Pharma are expected to come out with their second quarter results.
The data with the stock exchanges showed that the foreign institutional investors (FIIs) were net buyers in the weekly trade, while domestic institutional investors (DIIs) were net sellers.
“Short-covering before the derivatives expiry might also yield in a few additional liquidity in the markets”, Mathews cited.
“VIX (volatility index) is also suggesting a rise in volatility which could lead to minor corrections, if the index does not sustain at these higher levels”.
“We remain of the view that a cut in the deposit rate is the most effective measure to counteract sharp euro appreciation”. The pound rose 0.3 percent to $1.5354, after sliding 1 percent over the previous four days.
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UK’s benchmark FTSE 100 ended up 1.04 percent, the pan-European FTSEurofirst 300 ended the day up by 1.92 percent, Germany’s Dax ended up 2.78percent, France’s CAC finished the day up by 2.44 percent.
