Now that it looks unlikely that the Fed will start increasing the interest rate from September , the market has to keep a close watch on the data from US.
In general we are back to those days where ' Good news from the US economy will be bad news for the equity markets' . Is the market factoring in the rate hike ?? It looks like not yet ... The market is ' Enjoying the sunshine while it lasts ' .
India may reduce interest rates as inflation comes down. However with global rates expected to go up this will not be a directional change for Indian rates . Indian rupee looks weak in the medium term and may cross 68 against the USD sooner than expected.
Once the rate hike starts the market will have to live with the fact that there has to be a cost for risk capital . It will also force industries to use capital more prudently .
Stay clear from highly leveraged companies and look for shelter in companies with strong balance sheet.
The commodity sector will face another selloff unless China comes to its rescue. Can China afford a severe economic slowdown, what will be the political impact of the same ?