All the global indices rallied for the day(US and European markets rallied on Wednesday) as China had announced a 50 BPS cut in its rates and the Central banks(FED,BoE,BoJ,ECB, Bank of Canada and the Swiss National Bank) announcement to contain the EU crisis. Our markets opened with a gap and could not sustain at higher levels.Among the sensex stocks, Bharti Airtel, Bhel, ONGC, Sun Pharma and HUL ended negative for the day.
Rupee strengthened against the dollar(Dollar fell against major world currencies). A move below 51 in Rupee may trigger sell-off in IT stocks. Though the Rupee is currently trading around 52 levels, expect inflation to be lower in the coming weeks due to base effect.The fuel price reduction is yet to be priced in. As long as the Rupee hovers around 52 levels, don't expect further price reduction in fuel prices as it means higher import costs for the Oil companies.
JPMorgan expects Australia's RBA To Cut Rates by 25 Bps in this month.
Eurozone's November PMI came at 46.4 lowest since June 2009. European indices ended in red for the day.
I would advise caution to the retail investors.Don't get carried away by rallies like this.If you remember, on October 27, S&P rallied 4 % on a new European plan but the gains did not sustain.Including Wednesday's rally, S&P rallied 9 times since 2008 by 4% and had fallen by 4%, 10 times in the same period.Trade with a strict stop loss.
Have a great weekend!!
