A surprisingly hawkish pivot by the US Federal Reserve, along with the European Central Bank and Bank of England, crushed global equities towards the end of the previous week.
All three banks raised their benchmark interest rates by 50 basis points each, and warned of ‘forceful monetary policy response’ in 2023.
Among the lot, Fed announced that it saw the benchmark rate peaking higher than expected at 5.1% next year.
It also suggested that inflation may remain stubbornly above its 2% target till the end of 2024; thus ruling out any hopes of rate cuts until then.
The spillover effect hit India as well with the benchmark S&P BSE Sensex index cumulatively sinking over 1,300 points during last Thursday’s and Friday’s session.
For the week, the Sensex ended 844 points lower at 61,338. The NSE Nifty50, meanwhile, tanked 1.2% to 18,269.
In the broader markets, the BSE Mid-cap and Small-cap were down fell up to 1.4%.
Going into this week, analysts expect markets to consolidate further and track global cues amid no domestic events.
Naveen Kulkarni of Axis Securities, for instance, predicts a limited upside in equities this week on the back of stretched valuation.
Kulkarni says, markets corrected after Fed rate hike and impact to be felt for weeks. Valuations not cheap. Inflation sticky at higher level. Expect some more correction
Technical charts, too, are flashing warning signs. The frontline indices have dipped below their short-term moving averages with the 30-pack index eyeing over 3,000 points downside if it breaches key support levels.
Byte in> [Avdhut Bagkar, Business Standard]
That said, any positive newsflow may trigger upmove towards the immediate resistance zones.
These are 62,285 for Sensex, and 18,525 for Nifty.
Today, market participants will focus on primary market activity. The Rs 1,500-crore IPO of KFin Technologies will open for subscription today, an close on Wednesday.
The price band of the offer is fixed as Rs 347 to Rs 366.
 "Will US Fed's hawkish pivot push Sensex to 58,000?")
