Moneycontrol Pro Panorama: Rupee gets Fed blues: A knee-jerk reaction?

Dear Reader,

The US Federal Reserve’s hawkish turn is still creating ripples across markets. The dollar index registered the sharpest two-day increase this year. Global stock indices are feeling the heat. At the time of writing, the Sensex was down nearly 300 points, or 0.6 percent, on course to close lower for the second day in a row.

But is this just a knee-jerk reaction or is there more to it?

A lot still depends on when the Fed would walk its talk. Even for its bond buying programme, chair Jerome Powell said they would “talking about talking about” scaling down its asset purchases. In essence, Fed officials will discuss when they will start talking about reducing purchases. It’s all in the hazy future.

In the meantime, the world could move on elsewhere – a fact that will be dictated by the course of the pandemic about all else.

Take the case of India.  Our herd immunity tracker shows the pace of vaccination improving. Taking government numbers at face value, the medium-term prospects for vaccinating the entire adult population looks solid as well.

If this actually materialises, along with the rebound in activity, won’t that be more than enough to whet the appetite of foreign investors? That’s a point to ponder. It is a major factor in deciding the rupee’s direction as we argue here.

Do check out these investing insights from our research team:

Coal India: Higher dividend yield to protect stock downside
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Midcap cement duo that deserve attention
GNA Axles — A niche player with a strong brand and healthy financials

What else are we reading today?

Why CESC trades at a discount to Torrent Power
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Wealth creation beats the pandemic
Allocate more to make RoDTEP a successBond spreads collapse as investors rush into corporate debt (Republished from the FT)

Technical picks : NTPC, New India Assurance, Dixon and Hikal (These are published every trading day before markets open and can be read on the app)

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Ravi Krishnan

Moneycontrol Pro