Although US Federal Reserve has increased its prime interest rate by 75 basis points, the biggest increase in the last 28 years India So far it seems unaffected. Analysts say the market has already advanced 75 basis points in the past few days. both indian equity market And this Rupee opened in green.
How is Sensex reacting?
Indian equity markets opened on a positive note on Thursday morning after the US Fed rose 75 bps overnight in global markets. At 9:16 am, the Sensex was up 506.41 points or 0.96 per cent at 53,047.80, and nifty It was up 142.40 points or 0.91 per cent at 15,834.60.
ICICI Bank, Bajaj Twins, IndusInd Bank, Reliance, SBI, Maruti, Titan and Axis Bank gained up to 2 per cent in the 30-share Sensex. Meanwhile, HUL, Nestle, Dr Reddy’s and Bharti Airtel were a handful of losers.
However, at 11.48 am, the Sensex closed at 52,252 points down 280 points. The reason for the sudden fall is not clear at the moment.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “The guidance for a terminal rate of 3.4 per cent by the end of 2022 and 3.8 per cent in 2023 reflects the determination to fight inflation. However, a factor currently unknown is whether rising rates will propel the US economy into recession. ,
One analyst said the US Fed’s guidance helped calm markets temporarily, but investors are now focused on macroeconomic factors such as inflation.
How is Rupee reacting?
After touching an all-time low on Wednesday, the rupee on Thursday strengthened 15 paise to 78.07 against the US dollar in early trade after the US Federal Reserve hiked interest rates by 75 basis points and indicated more rate action to fight inflation. reached at. Besides, a firm trend in the domestic equities and a weak US dollar in the overseas market supported the domestic unit, Forex dealers said.
However, continued outflow of foreign funds and rise in crude oil prices limited the appreciation bias of the rupee. In the interbank foreign exchange, the rupee opened stronger at 78.06 against the US dollar, then closed at 78.07, registering an increase of 15 paise over the previous close. It was trading in a tight range in the initial deals. The rupee had closed at a record low of 78.22 against the US dollar in the previous session.
How is the bond market reacting?
Bond prices were trading lower in the morning as yields rose marginally by 1 basis point. However, now the situation has reversed and yields are trading below 2 basis points and the yield on benchmark 10-year government securities is 7.573 per cent.
The US Fed raised interest rates by 75 basis points and signaled aggressive rate hikes and targeted interest rates at 3.40 percent by the end of this year. The US Fed lowered the growth forecast for 2022 to 1.7 per cent and also for 2023 against forecasts of 2.8 per cent for 2022 and 2.2 per cent for 2023. The US Fed also raised the inflation target for 2022 to 5.2 percent but lowered it to 2.6 percent from 2023 and 2.2 percent for the year 2024.
What do analysts say?
“We expect the dollar index to remain volatile and may maintain its support level of 103.55 at the close. On the other hand, the rupee showed weakness after exceeding the expected WPI data for May 2022. US Dollar The rupee on Wednesday hit a lifetime low against Rs.50. Selling in domestic equity markets and higher crude oil prices coupled with trade deficit is also putting pressure on the rupee. We expect the rupee to remain volatile and test the 78.55 level. can do,” said Rahul Kalantri, vice president (commodities) at Mehta Equities.
Gaurang Somaiya, Forex and Bullion Analyst, MOFSL, said, “Today, the focus will be on the Bank of England policy statement and hawkish commentary could support the pound at lower levels. We expect USD-INR (Spot) to trade with a positive bias and bid in the range of 77.70 and 78.40.
(with inputs from PTI)
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