Indian Market Likely to React to US Fed Outcome, to Remain Volatile, Say Analysts

Indian Market Likely to React to US Fed Outcome, to Remain Volatile, Say Analysts

Mumbai: The Indian market is likely to react to the outcome of the US Federal Reserve’s (Fed) meeting on Wednesday, with volatility expected, analysts said.

The Fed is widely expected to raise interest rates by 25 basis points, but the market will be watching closely for any changes in the central bank’s tone and guidance.

“The market will be closely watching the Fed’s statement and press conference for clues on the future path of interest rates,” said Abhishek Goenka, founder and CEO of IFA Global. “Any hawkish signals from the Fed could lead to a sell-off in the Indian market.”

The Fed has been raising interest rates aggressively in an effort to combat inflation. The central bank has raised rates by 425 basis points since March, and the market is expecting another 50-75 basis points of hikes this year.

Market Volatility

Analysts said the Indian market is likely to remain volatile in the near term, due to a number of factors, including the Fed’s decision, global economic uncertainty, and upcoming domestic events such as the Union Budget.

“We expect the market to remain volatile in the near term, with investors awaiting clarity on the Fed’s policy stance and the upcoming Union Budget,” said Vinod Nair, head of research at Geojit Financial Services. “The market is also likely to track global cues, particularly from the US market.”

Key drivers

The key drivers of the Indian market in the near term are expected to be:

US Fed outcome: The Fed’s decision on interest rates will have a significant impact on the Indian market.
Global economic uncertainty: The ongoing war in Ukraine, rising inflation, and slowing global growth are all weighing on the Indian market.
Domestic events: The upcoming Union Budget and state elections will also have an impact on the market.

Analysts advise investors to stay cautious and to focus on quality stocks with strong fundamentals.