Markets are cutting losses as the Fed’s 75 bps rate hike is in line with expectations

Markets are cutting losses as the Fed’s 75 bps rate hike is in line with expectations

Indian equity markets opened on a negative note after the US Federal Reserve signaled another hike in interest rates after raising them by 75 basis points yesterday.

It was the third rate hike by Federal Reserve Chairman Jerome Powell. Reference interest rates are now at 3-3.25%. According to Fed projections, rates could rise to 4.40% by the end of this year and to 4.60% in 2023.

“We have to get inflation behind us.” I wish there was a painless way to do this. It’s not,” Powell said.

Both US and Asian markets traded lower following the hawkish comments.

Today on September 22, both the Sensex and the Nifty50 started the day with deep cuts, with the Nifty50 down over 100 points to trade below 17,650 levels and the Sensex down over 450 points to trade at 58,996.

Later in the hour, benchmark indices recovered some losses with the Nifty50 down just 21 points at 17,701 levels, while the Sensex was 96 points lower at 59,387 levels.

This is because markets have already priced in a 75 basis point rate hike by the US Fed.

“Ultimately, the Fed is not comfortable with persistently high inflation, and its return to target remains a priority, despite signs of weakening in some interest rate-sensitive sectors of the economy, such as housing,” HSBC Asset Management said in a report.

“While the committee does not expect rapid policy tightening to trigger a broader recession, Chairman Powell noted that the chances of a soft landing are diminishing and there is no painless way to reduce inflation,” the report said.

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Banks, energy, IT and pharma stocks traded in the red, while auto, FMCG and metals witnessed buying.

Adani Ports and Special Economic Zone were the top gainers in the Nifty50 followed by ITC, Shree Cement which helped the indices pare losses.

Top winners % change The best loser % change
Adani Ports and SEZs 1.73% SBI Life Insurance -1.74%
ITC 1.53% HDFC -1.70%
Shree Cement 1.23% Bajaj Finserv -1.18%
Eicher motors 1.10% HDFC Bank -1.14%
Maruti Suzuki 0.95% Onion -1.13%
Hindustan Unilever 0.91% ONGC -0.92%

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