We knew that one was coming. What we didn’t know was what the market reaction would be to this latest act of the FED. Anyone with any degree of common sense knew that shuffling money between short-term debt and long-term debt was not going to save the world's largest economy. However, markets are often devoid of common sense, so we had to wait for the event to see whether or not the market would immediately recognize the futility of the Fed’s action.
Needless to say the market knew immediately that this was not going to stop the global recession. If QE1 and QE2 where money was printed enormously, couldn’t stop the global economy from rolling over how was shuffling some money back and forth between long-term and short-term debt going to do anything?
Anyways here is a chart of the Nifty for the past three sessions :
On 20/9 we had single print buying off 5034 at the open.
We will wait to see how these buyers react to the gap down, and take cues from there.
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