Post Market views - Dec 16, 2021 - Mr Mitul Shah, Head Of Research at Reliance Securities

The market witnessed profit selling at last hour of trade after strong opening on the news that Fed has kept rate unchanged, though it will speed up its exit from the policies it adopted early in the pandemic. Asset purchases will now decrease by $30 billion per month and likely come to an end in Mar'22. Nifty is trading in a narrow range up just 0.1%. The broader market underperformed the main indices, Nifty MidCap is down 0.6% while SmallCap index declined by 0.9%. All the sector are in red except Nifty IT which is up 0.9%.

Fed tapers bond buying aggressively, pencils in 3 rate hikes next year. The Fed will be buying $60 billion per month of bonds starting in January, down from December's rate of $90 billion, will likely to continue that trajectory in the months ahead. The central bank, as expected, announced a faster reduction in the pace of its bond buying to tackle high inflation rates.

Indian government's focus is clearly on supporting growth through sufficient liquidity and low interest rates despite street fears over rising inflation, changes in interest rate policy by global economies and high commodity prices. India is at the beginning of capex revival phase and therefore corporate earnings recovery looks sustainable and premium valuations might sustain, barring near term hiccups. Market may remain under pressure over near term, while with the beginning of earning season in Jan'22, it would witness gradual recovery. 3QFY22 result performance is key monitorable at the beginning of new calendar year 2022.

Source : Equity Bulls

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