FOMC Meeting started, the press conference with FOMC Chair Janet L. Yellen live beginning at March 19, 12:00 AM (Indian Standard Time)
THE US INTEREST RATE CYCLE and THE SENSEX :
“Sensex returns seem to have a relatively tight relationship with turning points in the US monetary policy cycle. When US Government bond yields start rising in the wake of the Federal Reserve signalling a tightening of the US rate cycle, money flows out of the US bond market and into global equities. Emerging market equities and the Sensex benefit from this. Almost every period of rising bond yields in the US has been accompanied by a rally in the Sensex.
The Federal Reserve has indicated by bringing QE to an end three months ago that at some stage in CY15, rates will start rising. Going forward, as the USD denominated cost of funding rises and provided the cost of commodities stays muted, India stands to benefit.”
Saurabh Mukherjea, CEO – Institutional equities Ambit Capital