Today, the Indian indices may continue their northward movement due to overnight gains in the US market. The market is likely to open flat to slightly positive. Things may turn choppy and rangebound later in the day. Avoid mid-caps and small-caps as the current rally may soon fizzle out.
As expected, the Fed has announced plans to buy up to $300bn in government securities. It will also expand its balance sheet by purchasing up to an additional $750bn of mortgage-backed securities. The key rates have been left unchanged at near zero. However, not all is hunky-dory. The UK’s unemployment has shot up to 2mn mark while the World Bank has cut China’s GDP forecast to 6.5%.
It may just be a happy coincidence to see markets positive as inflation flirts with the sub-1% mark. That prices of even street snacks are rising is a reality we have to live with in a depressing economy. The inflation figure which will come in around noon is already discounted, and may not have a major bearing on sentiment for long.
