NSE Nifty is likely to open below 18,000 as global stocks turned sharply lower following the US Fed chief’s hawkish statement after the expected 75 bps rate hike. However, analysts expect a limited downside for markets as foreign portfolio investors have started buying Indian stocks. Softening volatility index and relatively stable rupee will aid domestic markets to withstand global volatility, they added.
The US stocks ended sharply lower after the Fed chief Jerome Powell struck to hawkish stance after announcing the central bank’s most-aggressive tightening campaign since the 1980s to thwart inflation.
Edward Moya, Senior Market Analyst, The Americas OANDA, said: “The US stocks initially popped after the Fed provided enough hints that the end of the Fed tightening cycle is nearing. Stocks could not hold up their gains as Fed Chair Powell reminded markets that inflation has been high for 18 months and that it is too early to think about pausing rate hikes.“
“Stocks might struggle here as the risk of the Fed taking rates above 5 per cent are clearly still on the table,” he added.
SGX Nifty at 17,989 indicates about 150 points gap-down opening for Nifty. The Nifty futures on Tuesday closed at 18,146.75. Asia-Paicific stocks were trading lower in early deals down with Australian and Taiwan stocks leading the slide by falling in excess of over one per cent. Japan’s Nikkei is ruling flat even as Korea and Chinese markets are down by about 0.5 per cent.
Meanwhile, the un-scheduled RBI’s monetary policy meeting on Thursday is unlikely to surprise the market, said analysts.
The unscheduled meeting of the RBI’s Monetary Policy Committee is unlikely to spring a surprise with an off-cycle rate hike, even though it comes a day after the Federal Reserve’s policy decision and unseasonal rains affecting crops, which in turn intensifying the inflationary pressure on the Indian economy, said Rahul Chander, MD & CEO of LivFin.
Analysts expect profit-taking at domestic markets and stock-specific action after a sharp run up.
“Strong US employment figures dented expectations for a slowdown in rate hikes. Since the market has already priced in a 75 bps rate hike by the Fed, market movement will be determined by their comments on its next moves,” said Vinod Nair, Head of Research at Geojit Financial Services.
According to Ajit Mishra, VP-Research, Religare Broking, markets will react to the outcome of the US Fed meet in early trades and then the focus would shift to the MPC’s special meet.
“The outcome of these events could trigger some volatility but the market tone is likely to remain positive. We thus recommend focusing more on accumulating quality stocks on dips,” he added.