Dalal Street indices eked out marginal gains yesterday even as the outcome of the US Federal Reserve boosted risk sentiment globally.
Under normal circumstances, a larger taper and three rate hikes of 25bp each in 2022 would have been considered negative from the market perspective. However, world stocks rose on Thursday as the US Federal Reserve expects inflation to gradually cool off.
This, Fed chair Jerome Powell said, would enable a slower lift-off in policy rate to 1.6 per cent by the end 2023 and 2.1 per cent by the end 2024.
Yet, as the rates will stay below the level of 2.5 per cent, which is considered a neutral level by the Fed, the Fed policy was positive for equities.
Commenting on the outcome, Mohit Ralhan, managing partner and chief investment officer at TIW Private Equity said the Fed’s commentary on inflation has made the start of the tapering a foregone conclusion. Listen in.
That said, rate hikes by the world’s biggest economy would also mean an outbound flight of capital from emerging markets, including India.
And this may keep Indian equities under pressure in the near-term.
On Thursday, too, the Sensex and the Nifty opened nearly a per cent higher amid a firm global set-up, but they ended flat amid persistent FPI selling.
Let’s go to Gaurang Shah, senior vice-president at Geojit Financial Services to know the near-term market trajectory.
Mohit Ralhan of TIW PE expresses similar views and says Indian markets have been witnessing a downward pressure in anticipation that the Fed’s policy may lead to a decrease in liquidity.
Against this backdrop, investors should expect a choppy session on Friday as well.
FPI activity, outcome of the monetary policy meeting of the Bank of Japan and general global sentiment will be the key drivers today.
Back home, initial public offers, stock-specific action, FTSE rebalancing and rejig of Sensex components will also guide the indices.
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 "US Fed's policy to intensify FPI sell off on Dalal Street?")
