Indian Markets have been trading with a bullish bias for the past few weeks after the recent sell-off due to global concerns. Equity markets were shaken badly by the ongoing war between Russia-Ukraine and the rise in inflation figures all over the globe in the mid of the current calendar year.
Due to the above-mentioned concerns, the American central bank Federal Reserve has taken aggressive interest rate hikes in the past few months to tackle the soaring inflation. In the next week, one more FOMC meeting is scheduled where one more round of rate hikes is expected from the market participants.
After two major events of the state elections outcome and the RBI monetary policy in India, now all eyes will be on the FOMC interest rate decision. We expect markets to track this development and may induce further volatility in the domestic equities followed by the global market movement and the move in the US dollar and the commodity prices.
Indian markets are well placed at current levels to take the check from their global peers and have been a major outperformer in the last couple of weeks. There are no major expectations from the Federal Reserve meeting and mostly a hike of around 50 bps is expected from the market participants all over the globe. It is more important to note the comments of the Fed Chair post the decision which will be more important to note and will decide the further trend of the markets. Below is the synopsis of the market reaction expected on the event:
|FED HIKE INTEREST RATES BY 50 BPS||COMMENTARY – HAWKISH||NEGATIVE FOR MARKETS|
|FED HIKE INTEREST RATES BY 25 BPS||COMMENTARY – HAWKISH||POSITIVE FOR MARKETS|
|FED HIKE INTEREST RATES BY 50 BPS||COMMENTARY – DOWISH||POSITIVE FOR MARKETS|
Short-term traders should have a close watch on the rate of hike quantum and the commentary thereafter and also hedge their positions accordingly. Technically, Nifty is looking good on charts and some correction towards 18200-18300 can’t be ruled out after the recent sharp-up move. On the other hand, 18800-18850 will the major resistances for the index for the next week.
Long-term investors should have a wait-and-watch approach in the markets at the current juncture and wait for markets to correct to add fundamentally and technically strong counters to their portfolio. On the other hand, our regular SIPs in the mutual funds should continue keeping the long-term perspective in mind, and many major corrections should be utilized as the buying opportunity.