Fisdom Weekly Update (Issue #23): What Moved My Market?

Indian markets opened on a positive note this week for the sixth consecutive session on the back of energy & financial service sector positive performance but settled lower on Friday as investors booked profits.

Both Sensex and nifty went up by 0.37% and 0.26% respectively during this week.

Meanwhile, here is more on an important development by the US federal bank:

US holds interest rates steady
The central bank in US did not change its interest rates on Wednesday this week and adopted a dovish stance. The Fed’s statement also hinted that they do not foresee any need for a rate cut – at least this financial year.

Implication
Major central bank turning dovish may push foreign investors to divert capital towards emerging markets given the opportunity it presents in terms of superior returns. Given that India is a preferred capital destination among emerging markets, this allows room for India to take an accommodative stance without worrying about significant currency pressures.

What should a debt fund investor do?
A debt mutual fund investor can stay invested in funds with higher exposure to AAA-rated bonds with a modified duration of 2-3 years.

Mutual Fund Category Winners
Given recent developments around RBI’s swap auction announcement and clarity around interest rate & currency rate expectations, mutual funds oriented towards the technology & banking sector along with debt fund categories have out shined the rest this week.

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Thanks,
Nirav (Head of Research)
Fisdom