Stock Market: US Fed softens with 25 basis rate hike; taper off hope revives
By S Jha
New Delhi, March 22: The US Federal Reserve lived up to the expectations that it would not raise the rate by more than a quarter of a percentage after it came in the line of fire of the critics for blind-walking the financial institutions to bankruptcies. With large US banks collapsing under the might of high interest rates, the US Fed has already been under the hammer of the critics.
The US Fed, yet, has not ruled out another rate hike this year, as the inflation in the largest economy of the world remains rabidly beyond control. The US Fed commentary is still awaited, which may eventually give a direction to the global equity market.
Dow Jones swung into green soon after the Fed announcement, gaining over 300 points or one per cent at the time of writing, with investors betting that the hawkish tone may be a thing of the past, as the American financial institutions may not weather steep rate hikes any more.
The Indian indices remained sideways during the session predictably awaiting the US Fed action. The Reserve Bank of Indian monetary policy meeting will also take place in the first week of next month. There is a build up of pressure on the RBI from a number of economic columnists to pause the rate hikes to allow the Indian growth story to pick up the momentum.
The foreign institutional investors for a change were marginal buyers in the cash markets on Wednesday. The Indian indices will be going for weekly expiry on the back of the US Fed rate hike trigger, and a trending move is not ruled out on Thursday.
Bajaj Twins which had been battered in the previous sessions remained firm for a second day in a row. HDFC Insurance and SBI insurance have also been trending up for the last couple of days. Reliance Industries took a pause after rising strongly on Tuesday. IT scrips were trending up in the morning session, but they gave up all gains amid reports that their margins will be impacted on account of the economic stress in the US.