US Federal Reserve meeting day 2: What does a rate decision mean for Indian stock market?
Motilal Oswal Financial Services. According to market experts, the Indian markets have already priced in the anticipated status quo, with attention now turning towards the Federal Reserve's commentary for insights into the upcoming market trajectory.
“According to our analysis, the US Federal Reserve is expected to keep its benchmark overnight interest rate unchanged. However, market attention will be on the Fed Chairman's commentary regarding the economy and future projections on interest rate cuts the full year.
Indian markets have already factored in the expected status quo, with the focus shifting to the Fed's commentary for guidance on the next market trend. On the technical side, a Nifty close below 21,800 could lead to increased pressure on the overall market, while a close above 22,300 could boost market confidence," Prashanth Tapse, Sr VP Research analyst at Mehta Equities Ltd, told Livemint.
An indication from the Fed commentary that a rate cut is likely to be deferred to the latter half of the year due to a resistant economy, could elicit mixed views in the market as much of this sentiment is already reflected in the global market. “The Indian market is currently experiencing isolated volatility, driven by the elevated valuations of mid and small-cap stocks, impending national elections, a decline in retail inflows, and a slowdown in projected future earnings.
Our expectation is for India to persist in its underperformance, driven by the outcome of the Fed's policy and muted domestic trends," Vinod Nair, Head of Research, Geojit Financial Services, told Livemint. The experts further added that investors preferred to exit long positions ahead of the US FOMC Meeting, which will put the spotlight back on the
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