After opening the day on a flat note, stock markets in India witnessed buying interest and are presently trading marginally higher. Sectoral indices are trading on a mixed note with stocks in the IT sector and consumer durables sector witnessing maximum buying interest. Metal stocks are trading in the red.
The BSE Sensex is trading up 100 points (up 0.3%) and the NSE Nifty is trading up 30 points (up 0.3%). The BSE Mid Cap index is trading up by 0.2%, while the BSE Small Cap index is trading up by 0.1%. The rupee is trading at 65.21 to the US dollar.
In the new from global financial markets, Asian share markets are witnessing volatility ahead of US Federal Reserve’s two-day monetary policy meeting starting today.
This is the first policy under new Fed chief Jerome Powell. The Federal Reserve is expected to hike US interest rates on Wednesday and perhaps signal that as many as three more lie in store for the rest of the year.
Note that the Fed has forecast three rate hikes this year.
In its last meeting, the Fed said it expects “further gradual” rate increases. The target range for the federal funds rate currently is 1.25% to 1.50%.
Note that with the US economy chugging along for many months, the Fed is now gradually easing off the stimulus it provides to the economy by raising interest rates to more normal levels.
Federal Reserve Rate Hike in the Past 3 Years
How does a US interest rate hike affect Indian investors?
The instant effect is foreign money moving out of India’s vaults. This means a slight correction in the share market in India, albeit temporarily.
While this might provide a good buying opportunity in long-term stocks, the main thing to look forward would be capex and earnings trends.
In the end, Indian investors are better off staying informed about the corporate earnings revival than Fed rate hikes.