US Fed meet to guide markets

Buoyed by the better than expected quantitative easing programme announced by ECB and IMF forecast of 6.5 per cent growth rate for India in 2016, markets registered their sharpest seven day rally in the past five and half years during the week ended.

Both the benchmark indices, the Sensex and the Nifty closed at all time highs at 29,279 and 8,836. It is pertinent to observe that the Sensex and the Nifty have gained 1,932 points and 650 points since January 15, the day RBI lowered inte-rest rate by 25 basis poi-nts.

With funds and big market players focusing on frontline stocks, it was not surprising that midcap and smallcap stocks underperformed in this leg of rally. Market players are factoring budget expectations and reforms already, skeptics suggest that there is irrational ebullience in the markets and advice caution.

Track Q3 results and pick good quality companies which have shown good visibility of earnings. US Fed meet, weekend Greece elections, Obama visit “news flow”, F&O settlement may provide cues for near term direction of markets in the coming week.

For the week ahead chartists predict trading band of 28,800-29,700 for the Sensex and 8,700-8,950 for the Nifty. Immediate supports are at 29,000 and 28,825 and 8,750 and 8,700.

A warm day in January does not mean that spring has arrived; neither does an isolated piece of good news or bad news denote that a bear market or bull market is over.