FOMC meeting will dictate trend on Dalal Street: What should investors do? See what experts recommend

Bulls helped the Indian market to touch fresh record highs in September as both Sensex and Nifty50 rallied by over 2 per cent each. However, the upcoming US Federal Reserve policy meeting could bring some volatility, suggest experts. 

The market could remain volatile as the US Federal Reserve will kick off the two-day meeting on September 21-22. Global markets will be watching for an update on their bond-buying program. 

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The Nifty50 is in a strong uptrend, but experts advise investors to avoid any aggressive bets and cut leverage as the upcoming policy meeting could lead to a kneejerk reaction if the policy outlook turns hawkish. 

“The weak global cues on account of worry over slower economic growth and rising Delta variant cases globally would lead to market oscillating between greed and fear,” Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said. 

“Nervousness would be seen in the market next week ahead of Federal Reserve meeting, which could provide some indications on when the central bank will start withdrawing its monetary stimulus and start raising interest rates eventually,” he said. 

Reuters in a report said that the US Fed is expected to open discussions on reducing its monthly bond purchases, while trying any actual change to the U.S. job growth in September and beyond. 

“We expect markets to consolidate in a range and volatility may remain high as investors would look for cues on the timing of taper tantrums. Also, the future course of rates would be an important thing to watch out for,” Ajit Mishra, VP - Research, Religare Broking Ltd, said. 

“We believe the Fed may continue the same tone as stated in the last meeting minutes and thus recommend participants to continue with the “buy on dips” approach while being selective,” he said. 

The Nifty50 is in a strong uptrend and any kneejerk reactions will get quickly bought into. The Nifty50 has strong support near 17450-17350 levels. The NiftyBank which closed with gains of over 3 percent for the week ended September 17 will give much-needed support to the Nifty50 index, suggest experts. 

“Till the time NIFTY Bank is trading above 36,000 marks, the short-to-medium term structure remains bullish. Going by that theory; buy on dips could be a much better approach,” Mehul Kothari, AVP – Technical Research at AnandRathi, said. 

“The NIFTY Bank has managed to clear the life high of 37,700 in the week gone by. Now, there is a much stronger breakout in the index, which hints that it is inching towards higher levels of 40,000,” he said. 

Kothari further added that the trend would remain strong till the time NIFTY Bank index is above 36,000 levels. Thus, any dip, for the time being, could be used as a buying opportunity in banking stocks. 

Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.