Powell decides to celebrate an early Halloween

•The most widely anticipated event last week was Jerome Powell’s speech at the Jackson Hole Symposium. Well, it seems like Powell decided to celebrate Halloween 😱 a little earlier!

•Major US equity indices like the S&P500 and the NASDAQ100 tanked 3-4% 🥵post his speech in which he made it abundantly clear- do not expect interest rates hikes to mellow unless inflation backs down 🙄. Year-to-date (YTD), the NASDAQ100 is down 23% and the S&P500 is down 15%.

•But of course, there is always a mile to walk between talk and action. While its always easier to sound hawking, its a lot more difficult to keep hiking interest rates at the cost of economic recovery. Can Powell do a Volcker? Lets wait and watch.

•The Indian equity indices continue to keep their strong run- it’s like the markets have a short-term amnesia on who Powell is 😜. Both the Nifty and the Sensex closed last week in green by about 2.5% 🙌

•Nifty 50 USD continues to be own 6% YTD due to the weakness of the INR. After breaching 80 mark to the USD, INR had stabilized (and no less because of RBI’s intervention), but is now again hovering excruciatingly close to the 80 mark.

•In the market cap index category, both largecap and midcap are above the water, with smallcap continuing to be in the red territory. Nifty Smallcap 250 is still down by about 6% YTD.

•True to its name, the Nifty 100 Low Volatility 30 Index is displaying exceptionally low volatility – it’s like a wall 🧱. Compare that to the Nifty Alpha and the Nifty Momentum indices, which are like walls waiting for a knock 🥊 to finally crumble down.

•After a run up in interest rates on the back of rising inflation, the debt markets in India are mellowing down. Interest rates on the 10-year Government Bond has softened to 7.22%. Unless inflation in India throws some nasty surprises, the debt market is factoring that we are close to the end (or maybe the end?) of the interest rate tightening cycle.

•That’s all for now 👋. Have a wonderful week ahead 😀