• Along expected lines, the Fed hiked rates by 25 basis points, but what would really concern the markets will be the commitment to wind down the liquidity accommodation. That could crunch liquidity in the markets.
  • With a rate hike and lower liquidity support, most of the rate sensitive stocks in banking, NBFCs, realty and autos could come under pressure on Thursday. Be cautious on these stocks.
  • FIIs were net sellers to the tune of Rs.(-810) crores while DFIs bought Rs.1555 crore on Wednesday. FII selling in September has now crossed the $3 billion mark and has been a negative month after 2 months of positive flows.
  • US markets came mildly under pressure on strong dollar concerns but most of Asia and Europe were in positive territory. The SGX Nifty is in positive territory but could be vulnerable considering the lower liquidity accommodation by the Fed.
  • While the caution over financials remains, the bigger worry now would be downstream oil companies like BPCL and HPCL. With Brent crude at $82/bbl, the government may be forced to push some subsidy to downstream oil.
  • The import tariffs could be mildly negative for consumer durable stocks like Voltas and Havells. One can trade these stocks with a downside expectation of around 10-15%, although a lot will predicate on the market conditions.
  • One needs to start focusing on strong brands in the FMCG space as a best bet in these volatile markets. One can look to buy stocks like Titan, Marico, Britannia and Hindustan Unilever at corrected prices as they offer some margin of safety.
  • The Fed rate and the reduction of accommodation could be the big stories. Expect some negative reaction in the latter half of the day.

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