The week gone by had plenty of action and is now nicely set up for it being a great end to the calendar year 2013. RBI surprised everybody with its neutral stance but used very strong language when it said that it would not hesitate to raise interest rates even outside the policy if inflation did not subside. Probably RR the governor had his eye on what the FED would do that evening when he declared his policy review. All in all it turned out to be a brilliant decision as the FED has finally started the tapering in a phased manner and has announced a cut of $10 billion from the current level of $85 billion. This was a welcome step as it assures that it would be gradual and confirms the fact that stimulus would not be needed as the US economy is on the growth path once again.
The impact of the second outcome where US economy grows will have a much greater impact on India’s economy in terms of business opportunities than a small fraction of the possible loss on inflow from the $10 billion reduction in the bond buying programme.
Markets closed with positive gains for the week ending higher by roughly 1.75%. The week ahead has a trading holiday on Wednesday for Christmas and the very next day would be expiry for the December series. The markets are currently up almost 3% from the November expiry and the current momentum will give it a good shot at trying to reach the highs made on 9th December.
FMC has ruled that FT and its promoters are not fit and proper people to run exchanges and should not hold any stake in any such exchange. SEBI would have to take action in due course of time against these persons and this would affect the functioning of MCX and MCX-SX. With such a scathing remark against the management one wonders how the share price of Financial Technologies gained 13.11% while that of MCX gained 15.23%. Surely there is over speculation and also insider trading happening in these shares. One wonders whether SEBI with all the powers at its command would ever investigate what keeps the shares of Financial Technologies at these artificial levels.
The year would come to an end in six trading sessions from now. Markets as a whole have not done much in the year but individual stocks have outperformed the markets. The IT and healthcare sectors have been outperformers by far with stocks like HCL Tech, TCS and Infosys doing extremely well. The new lifetime highs which were made on the 9th of December are under threat and there is a strong possibility that we may see new highs as New Year’s gift if not Christmas. Ride the rally but keep a look out for any signs of weakness as falls at dizzy heights are always sharp.