1 day ago
Fed Rate Hike Signals Cautious Start for Indian Markets
The US central bank raised interest rates and suggested it might raise them again.
This can make the US dollar stronger.
A stronger dollar can make the Indian rupee weaker.
When the rupee weakens, some foreign investors may take money out of Indian stocks.
Foreign investors have already sold ₹17,222 crore of Indian shares this month.
India’s inflation also increased in August.
These factors could make it harder for India’s central bank to lower interest rates soon.
Indian government bond yields and oil prices remain high.
As a result, experts expect Indian markets to begin cautiously.
Gift Nifty indicated a tepid opening for Indian markets after the Federal Reserve’s rate decision.
The dollar index reached 100.30, increasing pressure on the rupee and potentially encouraging foreign equity outflows.
Foreign portfolio investors sold ₹17,222 crore of Indian equities this month after investing ₹49,831 crore over the previous two months.
India’s consumer inflation rose to 4.82% in August from 4.45% in July, potentially delaying expectations of monetary easing.
Higher US Treasury yields, elevated oil prices and currency pressure are expected to keep investor sentiment cautious.
- Who
- The Federal Reserve, Indian markets, foreign portfolio investors and analysts Hariselvan Radhakrishnan and Ponmudi R.
- What
- The Federal Reserve’s rate hike and hawkish outlook are expected to pressure Indian equities, the rupee and investment flows.
- Where
- The effects involve the United States, India and other Asian markets.
- When
- The market outlook applies to the current trading session; the cited FPI selling occurred this month, and inflation data covers August.
- Why
- Higher US rates can strengthen the dollar, weaken the rupee, raise borrowing costs and reduce foreign investment in emerging markets.
Key facts
- Gift Nifty signal
- Gift Nifty indicated a tepid start for Indian markets.
- Dollar index
- The dollar index reached 100.30 overnight.
- FPI selling
- Foreign portfolio investors sold ₹17,222 crore of Indian equities this month.
- Earlier FPI investment
- FPIs invested a combined ₹49,831 crore in domestic stocks during the previous two months.
- India inflation
- Consumer inflation rose to 4.82% in August from 4.45% in July.
- Indian 10-year bond yield
- The yield remained near 7.09%.
- Asian market moves
- Hong Kong’s Hang Seng fell 1.3% and Shanghai Composite declined 0.5%, while Korea’s Kospi and Japan’s Nikkei were flat.
Quotes
Hariselvan Radhakrishnan
Founder and CEO of HST Wealth
“In India, the 10-year government bond yield remains elevated near 7.09 per cent, reflecting pressure from higher global yields, elevated crude oil prices and continued weakness in the rupee”
businesstoday.in
“For India, higher US interest rates could strengthen the dollar, pressure the rupee and weigh on foreign investment flows into emerging markets.”
businesstoday.in
Sources
Related news
US Fed Hike Puts India’s Rupee And Markets Under Pressure
Fed Hikes Rates to 4%, Pressuring India’s Rupee and Markets
Rupee Opens Lower as Fed Hike Strengthens Dollar
Potential US Fed Rate Hike Could Pressure Indian Markets
US Fed Rate Hike Puts Indian Markets, Rupee Under Watch
Indian Stocks Mixed as Fed Hike, NSE IPO Shape Trading
Tokenized US Equities Show Demand Beyond Wall Street Hours
NSE IPO Could Redefine the Scale of India’s Capital Markets
Narayana Murthy's Quote Highlights Alumni's Lifelong Institutional Responsibility
OpenAI Discusses $1.2 Trillion Funding Round Ahead of IPO
