Anil Singhvi decodes US Fed action, big takeaway for stock market investors here

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The US Federal Reserve (US Fed) policy announced on Wednesday shows a marked improvement in the economic outlook of the country despite no changes on asset buying front. So, how should the Fed statement be seen in terms of impact on Indian stock markets as well as global front? Zee Business Managing Editor Anil Singhvi lists the big takeaway from the 16th December announcements.  

The Market Guru said that there were certain inferences from the policy announcements of the US Fed on Wednesday. 

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The news is positive as there is likelihood of improvement in the economic outlook of the country. The growth is expected to be higher and the unemployment numbers have come down. This is exactly what the stock markets want, Singhvi said. 

But there is another side to it, he said. The markets are booming only because of the presence of liquidity. The liquidity is coming only because there are concerns of economic recovery in the country.  

The learning from the 2008 economic crisis is to ensure liquidity in order to revive the economy. The US Fed has taken a similar stance this time too and the positive impact is there for us to see, he added. 

The question now is whether the US government takes a more guarded approach towards the introduction of new stimulus package?  

The US stock markets have given a mixed signal on Wednesday by trading in a narrow range. They were down by only 45 points, he further said. 

The stock markets on the one hand are looking for growth and don’t want to miss the stimulus package on the other hand, Singhvi opined. He said that the US markets are still making up their minds on which way they have to trend. 

He said that it will be very interesting to see which way they move from here.  

He also said that the US government has time till this week to come out with a stimulus package. If they do not come out with it within this week, it will not be able to infuse more money into the system.  

While there are precedents where funds are sanctioned if there is some hiccup or things get tied up - like what had happened during the Obama Administration, the Managing Editor said. 

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The result of all this will be seen over the next 1-2 days in the form of some volatility in the stock markets, Singhvi cautioned investors.