 "Markets remain choppy; Nifty hovers around 7,750")
At 11:30 am, the S&P BSE Sensex was down by 5 points at 25,488 and the Nifty50 gained 4 points at 7,754.
Overnight, the US Federal Reserve increased its benchmark interest rate by 25 basis points as widely expected at the conclusion of its two-day meeting on Wednesday. However, the “dovish” stance of the US Fed stimulated a global rally after the Fed said the further tightening of the monetary policy will be gradual.
According to Suvodeep Rakshit, Economist, Kotak Institutional Equities, "Steady dollar strengthening over the next few quarters will keep the INR on a depreciating bias against the US dollar. However, the fundamentals have improved significantly since 2013. The INR is unlikely to see any sharp or heavy depreciation and will likely remain in a range of 66-69 over the next year. Overall, we expect moderate negative impact on Indian equities and debt from a gradual increase in US interest rates over the next 12-24 months. India’s low external debt will shield against any sharp negative impact through the external sector channel."
He further said, "However, financials of some companies with large foreign currency borrowings and predominantly domestic revenues may be hurt due to any appreciation in the US Dollar. Additionally, the required rate of return for overseas investors could also rise, leading to higher implied cost of equity, especially for growth stocks."
Meanwhile, the global ratings agency Fitch ratings said that India is better placed to handle the impact of the Fed lift off than its peers.
The Finance Minister supported the above sentiment. He said that the end of uncertainties will actually help policy makers in emerging economies.
On the currency front, the rupee appreciated by 13 paise at 66.60 against the US dollar on increased selling of the American currency by exporters even as the US Federal Reserve raised interest rates for the first time in nearly a decade.
With the uncertainty surrounding the Fed rate hike coming to an end, the immediate concern for the investors is the passage of Goods and Services Tax (GST) Bill. With barely a week remaining for the winter session of Parliament to conclude, the deadlock surrounding the GST Bill doesn’t seem to end anytime sooner.
KEY STOCKS
Among individual stocks, M&M has extended the losses after the Supreme Court order on ban on registration of new diesel vehicles in Delhi until 31 March 2016. The stock has dropped 1.5%
After rallying nearly 4% in yesterday’s trades, ONGC has slipped 2.3% on account of profit booking and is the biggest loser on the Sensex.
Other prominent losers are Tata Motors, Axis Bank, Maruti Suzuki, ICICI Bank, all down between 0.4-1.4% each.
However, GAIL has extended gains for second straight day, up by 0.6%. The Supreme Court on Wednesday banned the registration of new diesel luxury cars and sport utility vehicles with an engine capacity of over 2000 cc in Delhi until 31 March 2016.
NTPC remains positive after the Ministry of Environment and Forests has given 'green signal' to a power project being set up by the company in Telangana while it has deferred another project of the PSU in Andhra Pradesh. The stock has gained 0.6%
Metal shares are rallying with Tata Steel, Hindalco, Vedanta, up between 1-2.5% each. However, industrial commodities including base metals and energy might decline further following a 25 basis point interest rate hike by the US Federal Reserve.
Among the other gainers, Sun Pharma, Bajaj Auto, SBI , have all gained between 1-2% each.