- The Fed decided to hold rates at the existing level instead of going for a 25 bps cut despite pressure from the government. Markets have built in a cut mixed with dovishness and global markets are likely to be disappointed.
- The market is showing underlying weakness with over 500 stocks touching a new 52-week low on the BSE. While VIX may not really spike, the individual corrections are likely to be a lot more menacing for stocks.
- FIIs were net sellers to the tune of Rs.97 crore while DFIs sold Rs.105 crore on Wednesday. There was some nervousness in the markets ahead of the Fed rate decision and that could explain the tepid institutional activity.
- American markets gave up most of its initial gains after the Fed maintained status quo on rates. Asia was sharply in the green but could react to Fed status quo tomorrow. SGX Nifty is in positive but here too the Fed could play a dampener.
- With the Fed holding status quo on rates, the markets are likely to be disappointed as we could see selling in most rate sensitives in India. Realty stocks and auto stocks could be the most impacted negatively. Position accordingly.
- We see Coal India as a good defensive bet which is also offering a good dividend yield at current prices. The company also posted handsome growth in profits in the fourth quarter. One can buy at 260 with targets of Rs.320 in one quarter.
- We stay long on Tata Steel on the back of improved demand from China. We target Rs.600 as the target price for Tata Steel in the next one month. However, we continue to be negative to cautious on JSW Steel.
- We expect most rate sensitives to react negatively to the Fed decision to maintain status quo on rates. Asian cues will be critical.
