Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

This will happen when Fed raises rates
Mon, 9 Feb Pre-Open

Various media reports these days have been giving diverse views on the US Fed's policy on interest rates. There is one group of experts which are of the view that there will be no hike in the rates over the next one year. This is led by the belief that inflation has slowed down, US dollar has been gaining ground and the US economy is not completely out of the woods yet. But there is the other view that the US economy is seemingly performing better and after the halt in the bond buying program, it is only inevitable that the US Fed will resort to hiking rates.

So what will the markets do when the Fed finally gets around to raising these rates? (Interestingly, this was also discussed by the Founder of Equitymaster, Mr Ajit Dayal in the recent Equitymaster conference - 'The tale of two Indias'.)

Since the financial crisis in 2008, the interest rates in the US have continued to remain extremely low; almost near zero. The investors have not seen rate hike since June 2006. The US Fed's rationale behind this move was that it would help revive the US economy.

The US Fed, for its part has been quite hazy about its intention to raise rates. However, should that happen, it could trigger a mass exodus of capital from emerging markets to the US. And India is not likely to be spared either. Indeed, when given an opportunity, global investors mostly prefer to keep their capital in their home countries.

Now, India has been a big beneficiary of the ultra-easy monetary policies of developed economies, especially the US. Stock prices across the board have risen even when corporate earnings growth has yet to keep pace. And thus the risk of capital flight could put the recent stock rally in reverse gear. And this could impact valuations across the board.

Thus, for investors it would be worthwhile to adopt bottoms up approach and invest in fundamentally strong companies since this group will be the least impacted when the market goes in a correction mode.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "This will happen when Fed raises rates". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Agora Research Private Limited.

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Agora Research Private Limited (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.