US begins taper: Here's what stocks to buy

The US Federal Reserve announced that will begin to taper its 85-billion-a-month bond-buying program on Wednesday but tried to balance the move by hinting that it will leave key interest rates unchanged at historic low levels for even longer than previously promised.

 

The US central bank said it would reduce its monthly asset purchases by $10 billion to total $75 billion. It trimmed equally from mortgage and Treasury bonds.

 

This sparked a sell-off in indian equities today. At 1030 hrs, the Sensex was down 167 points or 0.8% at 20,692 and the Nifty gave off 50 points or 0.8% at 6,167.

 

In the broader markets, the mid and the small cap indices were marginally in the red, down 0.1%, both outperforming the BSE benchmark index.

 

The rupee weakened in early trades after the Federal Reserve said it would scale down its monthly bond purchases, sending emerging market currencies lower.

 

So what stocks shoud you buy to save yourself from the FII (Foriegn Institutional Invetor) rout if that is the case, Pritesh Mehta, Sr. Technical Analsyt at IIFL Ltd tells Manu Kaushik. Here are the excerpts:

 

SmartInvestor : What are the charts indicating for the benchmarks and the key levels to watch out? Is there a weak trend on the anvil in short-term?

 

Pritesh Mehta : Despite a gap-up opening in today's trade, Nifty is firmly placed in red. It tells us that Index is finding it difficult to sustain at higher levels. We continue to hold our view which we had last week that Nifty is sooner or later going to drift lower below 6,000 levels. I would not think of venturing into a relief rally. Eventually this rallies will be sold into at higher levels.

 

SmartInvestor : Your take on Bank Nifty?

 

Pritesh Mehta : I believe Bank Nifty is likely to outperform Nifty in the near term.. At the start of the month, Bank Nifty broke out from a large triangle pattern and saw a high of 12,200 and thereafter it has seen a correction, but it appears to have taken support at the extended trendline of the triangle pattern. It is still holding above the support of its 200-DMA as well it is taking support of its rising trendline which is in place since August.

 

SmartInvestor : Your top bets for today to save investors from a probable FII rout?

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