The Rebound Rally - Weekly Market Update

After two weeks of sharp correction, the global markets came back up with a vengeance to stage a Rebound Rally. 

With the fears of Omicron abating, investors' sentiment turned from panic selling to panic buying. During the week, the DOW was up by 4.00%, S&P500 by 3.8%, and the Nasdaq by 3.60%

Apple's share prices jumped by 9.20% to new highs as it inched closer to becoming the first three trillion-dollar company. India's market cap as of 11th October 2021 as on 3.46 trillion to give you a perspective. 

Change of Stance

Until the end of November, the Fed maintained a stance that the inflation was transitionary. Amidst the Omicron sell-off during the previous week, Fed Chief Jerome Powell dropped the word transitionary while describing US inflation. 

The FED is expected to accelerate the bond purchase tapering by a few months in response to the persisting high inflation. 

Europe

Shares prices in Europe also staged a strong rebound as the fears of the Omicron variant subsided. The Euro Stoxx index was up by 2.76% and, so were individual country indices. 

China

Stocks in China also were up as the Central bank cut the Reserve Requirement ratio(RRR) to boost investor confidence. The CSI 300 index rose by 3.10%, and the Shanghai composite index climbed 1.6% last week. 

However, the news of the potential delisting of ride-hailing app Didi Global from the New York stock exchange dampened investor spirits. 

India

Investor sentiment in India was largely positive as the reserve bank maintained the interest rates as they were, and the Omicron fears subsided.

The Sensex was up by 1089.84 points or 1.80%, and the Nifty was up by 314.60 points or 1.83%.

Outlook 

Given the sharp rally last week, we could see some profit booking in the next; however, the markets are still expected to end the year on a high note.

Despite the air of optimism, the markets can still be pretty volatile in reaction to the Fed's monetary policy and other unforeseen triggers. 

As always, prudent asset allocation is the key to managing volatility. Holding cash in your portfolio can cushion the downside to some extent and help you grab the buying opportunities as they come.

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