The jobs data from US has been better than expected . On the face of it , good news from the economy should be good for the stock market .
However will this data encourage the Fed to go ahead with increasing the interest rate in the next meeting ?
In India we will have the central bank (RBI) decide on interest rates this week . The financial markets has already factored in a 25bps rate cut .
How to play the interest rate move from RBI?
No rate cut ..>>> Market corrects
25bps rate cut >>>>> Markets remain stagnant
50 bps or more rate cut >>>>> Market moves up
With inflation under control and the Government trying to stick to its target of fiscal deficit , RBI should not have much problem in justifying a rate cut .
However with Oil prices moving up from their recent lows , RBI may not be too aggressive in the rate cut . This in turn may dampen the market mood !
It will be prudent to wait out the RBI action before taking any fresh positions on NIFTY trading . We may see a short spike today based on the market expectations of a strong rate cut . Day traders may take advantage of the same , with a strict stop loss and square off the position at today's closing.