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The start of the new week appears to be bullish, as the US Fed Reserve Chair Jerome Powell at Jackson Hole Symposium sounded more accommodative on the tapering-off bond-buying programme and in no hurry to increase interest rates.
Speaking at the Fed’s annual Jackson Hole policy forum on Friday, Powell didn’t provide a specific timeline to slowdown its massive bond-buying programme. Powell’s tapering talk has highlighted the hesitancy of the Fed in scaling back the $120 billion-per-month bond-buying programme.
Foreign portfolio investors, going forward, are likely to be influenced by the Fed commentary, said VK Vijayakumar, Chief Investment Strategist, at Geojit Financial Services “If the Fed reiterates its 'transient inflation' theory and continues with QE till early 2022, markets will remain resilient, he said and added “Any way, they are unlikely to commit big fresh money at these stretched valuations.”
SGX Nifty futures currently hovering around 16,815 (at 730 am) , a gap-up opening up of around 100 points; Nifty futures on Friday closed at 16,718 points and Nifty spot close of 16,705.20. However, Asian markets are up only moderately while the US stocks last week rebounded strongly to end at all-time high.
Binod Modi, Head Strategy at Reliance Securities, said: “We believe India is at the beginning of capex revival phase and therefore corporate earnings recovery looks sustainable. Notably, a sharp improvement in key economic indicators like GST collection, auto sales volume despite supply disruption, improvement in collection efficiencies of MFIs and other high frequency indicators like e-way bills, power consumption, strong import-export growth in July, etc. indicate sustainable rebound in corporate earnings in subsequent quarters. This should aid market to sustain premium valuations.”
According to him “In our view, festive demand, recovery in rural demand and Covid-19 positivity rates will be in focus in the near term. We note higher government’s capex and revival in industrials’ capex should aid economic recovery.”
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