Many reasons to worry street

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Many Reasons to Worry Street

Many Reasons to Worry StreetMarkets glued in to Fed after positive US jobs data makes rate hike imminent

ContdThe better-than-expected US employment data for November, which paves the way for a rise in the interest rate mid-December may trigger volatility in Indian markets. Heavy selling by foreign investors, a depreciating rupee, and rising apprehension about the passage of the GST bill are likely to keep benchmark indices under pressure, reckon analysts. The US economy added 211,000 jobs in November with unemployment rate being steady at 5%, showed data released late on Friday night. Federal Reserve chairperson Janet Yellen's recent assertions that she will back an interest rate increase when policy makers meet in two weeks' time have made market participants believe that such a possibility is imminent.There's high probability that the US central bank will increase rates in the forthcoming policy meeting, said Tirthankar Patnaik, chief strategist and head of research India, at Mizuho Bank.I would advise investors to remain cautious because market volatility is likely to increase this week.

ContdThe Sensex dropped 490 points, or 1.88%, last week to settle at 25,638, its lowest closing level since November 18, 2015. Nifty fell 160 points, or 2.02%, in the week ended Friday to close at 7,781, below its lowest psychological level of 7,800. Analysts expect the Nifty to find near-term support around the 7,700 levels.Selling pressure in markets may increase if Nifty does not recover above the 7,850-7,880 levels, said Azeem Ahmad, derivative analyst at ICICI Direct. FIIs have remained net sellers last week and this has put pressure on markets and the rupee.Foreign institutional investors (FIIs) remained net sellers of equities worth `4,107 crore last week. However, local buying had perked up mid-cap stocks which have reached overbought territory .The rally in mid and small-cap stocks has reached dangerous levels. Investors should be cautious of these names, said Ravi Shenoy , assistant vice president research, at Motilal Oswal Securities.On the macroeconomic front, the government will release index of industrial production (IIP) data for October this year after market hours on Friday . IIP growth had moderated to 3.6% in September 2015 over the year ago period.

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