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US Fed, Macro data to set market trend

Monday, December 12, 2016
By Dominic Rebello

Domestic macroeconomic data, oil prices, global market trends and the outcome of UD Fed meeting will decide market trend this week. The two-day rate-setting meeting of the US Fed will begin on December 13, which will be keenly tracked across the globe. Talk of a policy tightening has kept emerging markets, including India, on edge as this means a flight of capital to the US.

“Next week, several important data and event are lined up, wherein FOMC’s two-day meet holds prominence. According to the recent surveys in US, rate hike is almost certain this time but participants across the globe are more keen on commentary part, for some cue on quantum of rate hike ahead,” said Jayant Manglik, President, Retail Distribution, Religare Securities. On domestic front, data on industrial production & retail inflation (CPI) is scheduled on Dec 12 and WPI inflation on Dec 14, he added.

"We believe the market has already factored in a 25 basis point rate hike. Nevertheless, since the US is the world's biggest economy and a major source of capital for emerging markets like India, something beyond that could bring selling pressure," said Abnish  Kumar Sudhanshu, Director and Research Head, Amrapali Aadya Trading & Investments.

Today markets will take cues from the IIP data released last Friday. “Other key global data release in the coming week includes, China's foreign direct investment (FDI) data for the month of November 2016 is due on Monday and China's industrial production data for the last month is due on Tuesday, 13 December 2016. While Japan's October 2016 industrial production data is slated to release on Wednesday," said Vijay Singhania, Founder-Director, Trade Smart Online.

Jimeet Modi, CEO, SAMCO Securities said, “This week the whole world will watch the events unfolding in Washington DC, when US FED meeting is expected to raise interest rates and more importantly the ensuing commentary would give a major direction for further course of action. However it is given that the interest rate will be raised by 0.25% and therefore that will just have sentimental effects on the market. The main trigger for Indian markets would be the future road map post demonetization and the major policy pronouncement through budget, till that time the market is expected to remain range bound with bullish bias.”

Traders should brace themselves for another volatile week and use further rebound to reduce the existing longs. Also, they should prefer hedged trades for fresh positions in the coming week, instead of outright trades on either side, advised Manglik.

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