Markets pare losses as Fed rate hike of 75 bps is in line with expectations

• Following the hawkish comments by the Fed, markets have traded on the lower side fearing a possible recession.
• “We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t,” said Federal Reserve Chair Jerome Powell.
• After opening on a negative note, benchmark indices recovered some of the losses as Nifty50 was down by 0.22% to 17,679 while Sensex slipped by 0.24% to 59,318 points.
• The markets had already factored in a 75-basis points rate hike by the US Fed.

Indian equity markets opened on a negative note after the US Federal Reserve signaled more interest rate hikes ahead, after hiking them by 75-basis points yesterday.

This was the third rate hike by the Federal Reserve Chair Jerome Powell. The benchmark interest rates are now at 3%-3.25%. As per Fed’s projections, the rates could go as high as 4.40% by the end of this year and to 4.60% in 2023.

“We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t,” said Powell.

Following the hawkish comments, both the US and Asian markets have traded lower.

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

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

This is because the markets had already factored in a 75 basis points rate hike by the US Fed.

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

“While the Committee does not expect rapid policy tightening to trigger a wider recession, Chair Powell did note that the chances of a soft-landing were diminishing and there is not a painless way to bring inflation down,” said the report.

Shares of bank, energy, IT and pharmaceutical companies were trading in red while automobile, FMCG, metals witnessed buying.

Adani Ports and Special Economic Zone was the biggest gainer in Nifty50 followed by ITC, Shree Cement aiding the indices pare losses.


SEE ALSO: Race for rate hikes: Here’s how much central banks have hiked interest rates in 2022
Gautam Adani, Mukesh Ambani account for 59% of India’s top 10 billionaires’ wealth
The second Adani: Gautam Adani’s elder brother is the sixth richest Indian