How the US Federal Reserve's upcoming rate decision may impact Indian markets

stocks

by 5paisa Research Team Last Updated: Dec 09, 2022 - 12:30 pm 15.4k Views
Listen icon

The US Federal Reserve is set to begin its two day bi-monthly deliberations on a rate hike, and the Indian stock market is watching nervously. While the Nifty and the Sensex have managed to hold on to their elevated levels thus far, the two benchmark indices could take a tumble if the US Fed chooses to go in for another significant rate hike. 

How much of a potential rate hike has the Indian market priced in?

A report by The Economic Times newspaper has said that according to analysts, the Indian market has already priced in a 75 basis points hike by the US Fed. 

What is the US Fed’s stance likely to be?

The Fed is likely to reiterate its hawkish stance, most analysts feel. 

Why are analysts expecting a 100 basis points hike by the US Fed?

“August inflation data has opened the door to the possibility of a 100 bps rate hike after two consecutive hikes of 75 bps. No matter which way the Fed goes with, the takeaway is clear — there is more work to be done and expectations should be adjusted accordingly,” Vikram Kasat, Head Advisory, Prabhudas Lilladher, told ETMarkets.

What is the US Fed’s key benchmark lending rate likely to be at by March?

Markets now expect the US central bank to boost its main interest rate to 4.4 per cent by March. That is up from forecasts of about 4 per cent earlier.

But could there be a situation where the Indian markets rise further?

Yes. Analysts say that if the news from the US Fed is better than expected, there could be a relief rally on the Indian bourses. 

What chances do Wall Street analysts see of a 100 basis points rake hike by the Fed?

According to the ET report, on Wall Street, analysts see a 20 per cent chance of a 100 bps rate hike as the labor market remains strong and as the economy slowly softens.
 

How do you rate this blog?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

oda_gif_reasons_colorful

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Open Free Demat Account
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest Blogs
Patanjali's false claims lands it in a trouble with Supreme Court

In the grand saga of health and wellness in India, enter Baba Ramdev, the face behind the wellness empire Patanjali. His online videos claim to offer cures that, according to him, modern science hasn't quite figured out. You might have stumbled upon those videos where he confidently asserts, "jad se bimari ko khatam kardene vala ilaj" (a remedy that eliminates diseases from their root)

Stock in Action- V-Guard Industries Ltd

V-Guard Industries Ltd Stock Movement of the Day

Market Outlook for 29 February 2024

Nifty started the ahead of the expiry on a flat note, but it witnessed correction throughout the day. The intraday pullbacks witnessed selling pressure and the index breached the 22000 mark and ended well below it with a loss of over a percent.