IGI Logo

Quote on Morning Market 01 December 2022 By Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

"Fed chief Powell’s observation that “it makes sense to moderate the pace of rate hikes” has come as a shot in the arm for the bulls to take the ongoing rally forward. The dip in the dollar index to 105.5 and the US 10-year bond yield declining sharply to 3.63 % are hugely favourable for the continuation of FII inflows. In brief, the market construct is favourable for the continuation of the rally. For the near-term, concerns of elevated valuations are likely to be ignored by the market. However, investors should be cautious while chasing this rally. Even though the Sensex and Nifty are at record highs the Mid cap index and Small cap index are 2% and 17% away respectively from their peaks. Therefore, retail investors may chase this rally driven by the FOMO factor. That would be risky since mid and small caps will correct sharply during a market pullback, which can happen since valuations are high. Safety is in high quality large caps."

Above views are of the author and not of the website kindly read disclaimer