US Fed | Business Upturn

Sensex, Nifty likely to start in the red amid weak global cues, Fed’s 25 bps rate hike

Markets Desk — Thu, 23 Mar 2023 01:30:37 +0000

Indian stock markets today are expected to start weaker taking cues from US markets post the US Fed’s announcement of a 25 bps rate hike despite the ongoing crisis in the banking sector. Dow Jones, S&P 500, and Nasdaq ended lower by 1.6% each overnight. The committee acknowledged that the banking crisis could slow down the already fragile economy.

The SGX Nifty, too, signals a negative start for the Nifty today. At 7:00 AM, the SGX Nifty was down 45 points.

Indian benchmark indices Sensex and Nifty ended higher on Wednesday led by buying interest in Bajaj Twins and Pharma stocks. The Sensex ended higher by 139 points at 58,214, while the Nifty gained 44 points to 17,151.90. However, analysts are of a view that the Nifty’s close above 17,200 remains a crucial point, post which, the markets could extend the rally further. “ Nifty50 from the last couple of trading sessions is trading in a higher high higher bottom formation and prices are sustaining above its 9-day exponential moving average on the daily time frame,” said Rohan Patil of SAMCO Securities.

Key Levels to track for Nifty today are 16,900-16,800 on the downside, whereas on the upside, the resistance for Nifty today largely stands at 17,250. Nifty Bank today will see support at 39,500, whereas a break above 40,000 could trigger a further rally in the index.

Foreign Institutional Investors broke the selling streak and turned net buyers of Indian equities after 10 consecutive sessions of selling. On Wednesday, FIIs bought shares worth Rs 61 crore in the cash market, provisional data from exchanges showed. Domestic Institutional Investors on the other hand continued to remain net buyers of Indian equities, buying shares worth Rs 383 crore, provisional data showed.

Stocks to watch today are HAL, Reliance Industries, Hero Motocorp, Nazara Technologies, besides others.

Goldman Sachs forecasts three additional US Fed rate hikes but no reductions in 2023

Sakshi Vats — Fri, 17 Feb 2023 13:01:33 +0000

Recent US data have shown sticky inflation and a resilient labour market, and Goldman Sachs anticipates the US Federal Reserve to maintain its hawkish stance in 2023. According to Goldman Sachs, the US Federal Reserve can increase interest rates three more times this year. According to a survey released on Thursday, producer prices increased in January by the most amount in seven months. According to another data, the number of Americans who applied for unemployment benefits dropped last week, indicating that employment in the US is increasing. In a note dated Thursday, analysts led by Jan Hatzius stated, “In light of the higher GDP and firmer inflation news, we are adding a 25bp (basis points) rate hike in June, for a peak funds rate of 5.25-5.5%.”

Additionally, a terminal rate of 5.3% by July is now factored into the money markets.

According to Reuters’ poll of economists, a number of other economists, besides Goldman Sachs, think that the US Fed will increase interest rates at least twice more in the near future. Furthermore, none of the analysts anticipated a rate reduction in 2023. J.P. Morgan had predicted a funds rate of 5.1% by the end of June before the release of recent US data. Furthermore, Bofa Global Research predicted that at the end of 2023, the terminal rate would be between 5.0% and 5.25%. It had previously earlier forecast two rate increases of 25 basis points apiece, which was greater than UBS’s projections. European Investment Bank has operations iIn March, there may be a rate increase in Europe, according to them. The present cycle of hiking will come to an end then. By the end of 2023, the policy aim would remain 4.75-5%.

FPI pull over ₹6,400 crore from Indian equity markets

Aryan Jakhar — Sun, 08 May 2022 10:48:42 +0000

According to news agency PTI, foreign investors withdrew around 6,400 crore from the Indian equity market in the first four trading sessions of the current month. After the Reserve Bank of India (RBI) and the US Federal Reserve boosted interest rates.

According to Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, FPI flows in India are projected to remain erratic in the short term. Due to headwinds such as high petroleum prices, inflation, and tight monetary policy, among others.

This comes at a time when Foreign Portfolio Investors (FPIs) have been net sellers for the past seven months. Removing a colossal amount of over Rs.1.65 lakh crore from the stock market. This was largely due to expectations of a US Federal Reserve rate hike. And the deteriorating geopolitical environment following Russia’s invasion of Ukraine.

Following a six-month selling run, FPIs became net investors in the first week of April when markets corrected, investing Rs 7,707 crore in stocks. They turned net sellers after a brief respite during the holiday-shortened April 11-13 week, and the sell-off persisted in subsequent weeks.

It is vital to note that FPI flows have been negative in May to far, with FPIs selling roughly 6,417 crore between May 2 and 6, according to depositories’ statistics. The market was closed on May 3 in observance of Eid.

FPIs pull with more interest

Vijay Singhania, Chairman, TradeSmart, said. “With central banks across the world pressing the panic button and increasing interest rates, equity markets have also reciprocated the sentiment. Foreign investors continue to sell relentlessly.”

Morningstar India’s Associate Director – Manager Research, Himanshu Srivastava, described the week as “eventful.” On May 4, the RBI raised the policy repo rate by 40 basis points with immediate effect and the cash reserve ratio by 50 basis points with immediate effect in an off-cycle monetary policy review. The markets reacted strongly to this, and they have been on a downward trend ever since.

The US Federal Reserve, on the other hand, boosted rates by 50 basis points on the same day, the largest increase in two decades. It stoked fears among investors that more significant rate hikes are on the way, he added.

The Bank of England also raised its main interest rate to its highest level since 2009. In addition, the market anticipates 10% inflation in the United Kingdom. Concerns over COVID-19 in China could also disrupt global supply networks and slow growth. According to Chouhan, this causes foreign investors to return to their own nation.

FPI withdrawl goes big

FPIs withdrew a net amount of 1,085 crore from the debt market during the period under review, in addition to stocks. Market volatility is likely to stay high in the future, since international investors may continue to withdraw cash. Selling is predicted to continue unless the battle is called off, according to TradeSmart’s Singhania.

According to Morningstar’s Srivastava, there is currently nothing that would encourage foreign investors to participate in Indian equities markets.

“Besides the rate hikes by both RBI and US Fed. Uncertainty surrounding Russia-Ukraine war, high domestic inflation numbers, volatile crude prices. And weak quarterly results does not paint an incredibly positive picture. The recent rate hikes could also slow the pace of economic growth, which is also a concern”. He said.

The recurrence of coronavirus outbreaks in China and other parts of the world is adding to the concern. FPIs often become risk adverse in such situations and take a wait-and-see approach until more clarity emerges, he noted.

Foreign flows into Indian shares may remain under pressure. Until the fundamental motivations and investment scenario alter, he noted. Given the current circumstances and rapidly changing global landscape.

Apart from India, other rising economies such as Taiwan, South Korea, and the Philippines have all experienced outflows in April.