Gold Silver Reports — Mkts see no US rate hike in Sept despite Yellen’s hints — Indian investors are unmoved by US Federal Reserve chair Janet Yellen’s speech on Friday where she hinted at an interest hike in the world’s largest economy with most market players saying a rate revision was unlikely in September.
As a result, the equity , bond and rupee markets are likely to see a relief rally on Monday . The main reason is that Yellen’s speech at Jackson Hole was positive on the US economy and neutralized any talks of an immediate rate hike, though her take on inflation was still weak.
In the run-up to the US Fed chief ‘s speech, dealers here were keeping their fingers crossed in case she gave any signal of when the second rate hike could come. Expectations were fuelled by comments from several senior members of the US Fed till Friday’s annual event.
According to a top fund manager, as of now, no one is expecting a September rate hike, while a December hike is too early to predict. As a result, equities are likely to gain as foreign funds are expected to buy risky assets globally , including in India. Debt yields in India will soften too as, again, foreign funds are expected to keep buying Indian bonds because of comparatively higher returns than most emerging and developed markets, traders said.
In Friday’s volatile session, the sensex closed a marginal 0.2%, or 54 points, lower at 27,782 with foreign funds net buying Rs 341 crore, BSE data showed. So far in the month, net FPI buying was at about Rs 7,800 crore (nearly $1.2 billion). In the bond market, the 10-year benchmark yield closed barely changed at 7.13%, as did the rupee at 67.06 to a dollar.
Outside of the frontline stocks, Welspun India lost another 9%, the fifth consecutive session where it slid, to settle at nearly Rs 50. During the week, the stock lost more than 50% after one of its largest customers cancelled a supply deal with the cotton textile maker while several others started audits for suspected quality issues. — Neal Bhai Reports