The Hindu Business Line : Fed cut: Marketmen expect more FII flow

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Fed cut: Marketmen expect more FII flow

Our Bureau

Mumbai, Nov. 1 The 25 bps US Federal rate cut was in line with the expectations of most marketmen in the country. This cut followed a rate cut last month of half a percentage point, that is from 5.25 per cent to 4.75 per cent. The Fed rate cut is a good sign for our economy and global economies on the whole, say researchers.

“The Fed rate cut is good for equity markets as the overseas funds are definitely seeing emerging markets as an attractive investment destination,” said Ms Shahina Mukadam, Head-Research, IDBI Capital Market Services Ltd.

Greater challenge

With the cut, analysts see more participation by the FIIs, which in turn is good news for our equity markets. But Mr Gopal Agarwal, Senior Fund Manager, Mirae Asset Global, pointed out that this cut will now pose a greater challenge for our policymakers who are trying to restrict capital flows into the country. He said that the RBI will now have to come up with more measures to check the foreign flows into our markets.

A healthy US market is good for our economy, so is the US Fed’s efforts to perk up the country’s stumbling housing and credit markets, say market men.

Market men in the country had already anticipated this cut, so there was heavy buying in the markets. The slump during the day, most people say, is due to the oil prices that rose due to the cut. Oil prices almost touched $100 today.