💼 When valuations are high, the market needs only a trigger to correct sharply, and this trigger was provided by the Fed guidance of fewer rate cuts in 2025, which went against market expectations.
💼 Even though the rate cut of 25 bp was in tune with the market’s expectation, the indication of only two cuts of 25 bp each in 2025, against the market expectation of three or even four cuts, spooked the market, resulting in a sharp sell-off in Wall Street.
💼 The Fed chief’s comments regarding the economy and the labour market are, in fact, positive, suggesting a resilient US economy. But always, the market gets spooked when the reality falls short of expectations.
💼 The dollar index rising above 108 and the 10-year bond yield spiking to 4.52% are clearly negatives from the perspective of FII fund flows, but this is likely to be only temporary.
💼 Sharp cuts in the market today will provide opportunities for investors to buy.
💼 The broader market will be impacted less despite high valuations since the FII impact will be negligible in this segment. Therefore, there can be a sharp bounce back in growth stocks in this segment.
💼 Long-term investors, who can ignore short-term gyrations, should focus on fairly valued large-caps, which will provide buying opportunities for investors who are prepared to wait.
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Posted On: 19 Dec 2024 10:40 AM
