US Fed would conduct meeting today for 2 days on Interest rates discussion, that would be disclosed tomorrow. It is necessary for all traders and investors in Indian Stock Market to understand its impact on Indian Stock Market to take the best trading decision.
We have seen that FIIs have been seeing continuous outflows for last few weeks in expectation of US Interest rate hike. Now all weak money has been almost out of the market. Those who are holding in India have strong conviction for long-term Indian Market growth story and they would hold it tight.
What would happen, If US extends Interest Rate Hike decision?
Market may see some small positive movement but uncertainty would still be there and hence it would again see consolidation or downtrend in upcoming days.
But If US Fed hikes Interest Rates in this session then what would happen?
It is the most interesting stance that if US hikes Interest rates then Indian Stock Market would have good days ahead. This is definitely contradictory to what market is predicting but this would be the real scenario going ahead in case US Fed hikes rates, but how?
Now, we know that most part of FIIs weak money is out of Indian Stock Market. US rate hike would remove uncertainty among global markets and so as in Indian Stock Market.
Following action would be seen in that case:
1.RBI would cut key interest rates in even next 3-4 days i.e. much ahead of RBI credit policy announcement day as uncertainty would disappear from global markets .
2.Festive season would start in India and till now, only HDFC Bank has reduced interest rates on borrowing. Other banks are still holding interest rates until RBI Policy is disclosed. So, all other banks would reduce interest rates.
3.Now, if all these banks reduce the interest rates there would be a big jump in Auto sector and especially two wheeler auto companies would see big revenues coming in. So one should consider Auto sector for going long if US Fed hikes rates.
All these instances would bring huge buying in Indian Stock Market and market would end up in big positive movement going ahead.