Indian market likely to react to US Fed outcome, to remain volatile, say analysts

Given these mixed signals, markets will likely react to the Fed meeting outcome in early trades on Thursday, potentially setting the tone for the day, said Ajit Mishra - SVP, Research, Religare Broking Ltd.

Vaamanaa Sethi
First Published12 Jun 2024, 10:22 PM IST
The Indian market is likely to remain volatile in early trades on Thursday, June 13, due to US Fed announcement.
The Indian market is likely to remain volatile in early trades on Thursday, June 13, due to US Fed announcement.(AFP)

The US Federal Reserve is poised to announce its key policy decision later today, with significant anticipation surrounding the central bank's timing for potential interest rate cuts for the remainder of the year.

In today's decision, there is a near consensus that the Jerome Powell-led FOMC will maintain the interest rates at the target range of 5.25%-5.5%. Policymakers have kept the rates steady at 5.3% since July last year, following a series of sharp increases from near zero that began in March 2022.

Also read: Track US Fed announcement updates here

Experts widely anticipate that the Federal Reserve will maintain its benchmark rate at 5.25-5.50 percent, a 23-year high, as the decline in inflation has not met expectations.

However, the June policy meeting is significant because Fed Chair Jerome Powell is expected to provide indications regarding the timeline for the rate cut cycle.

“The U.S. Federal Reserve is set to conclude a two-day meeting later today, with expectations that interest rates will remain unchanged. However, any hints about future rate decisions will be closely scrutinized, especially amid widespread speculation about a potential rate cut in September,” said Ajit Mishra - SVP, Research, Religare Broking Ltd.

Before the Fed meeting results, U.S. CPI data is also due today, expected to show persistent inflation in May. This trend could provide the Fed with more reason to keep rates high for an extended period.

Also read: US Fed policy today: From job market trends to macro indicators- 5 crucial factors that will dominate Fed’s mind

How US Fed outcome to impact Indian stock market?

Experts believe that the market is likely to react to the Fed meeting outcome in early trades on Thursday, June 13.

“Given these mixed signals, markets will likely react to the Fed meeting outcome in early trades on Thursday, potentially setting the tone for the day. We anticipate that Nifty will hold within the 23,000-23,100 zone if there is a dip, while the 23,600-23,800 zone may act as immediate resistance,” Mishra added.

He further added, “In this context, we reiterate our recommendation to seek buying opportunities on dips, focusing on sectors and themes that are attracting consistent interest.”

Also read: Gold rises ahead of US Fed announcement, soft inflation data; silver up by 3.2%

According to Prashanth Tapse, Sr VP Research Analyst at Mehta Equities Ltd, the impact can be high and volatile if FED takes a hawkish comments on the interest rate assumption, wherein markets are expecting for atleast 2 in next 6 months.

“Regarding the inflation reports lots of economists are expect CPI number to  increase from April and if this comes to be true domestic markets would see a small profit booking attempt tomorrow,” Tapse said.

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$23 B

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1.4%

₹773 Cr

₹2,705 Cr

₹1 Cr

₹14,370 Cr

₹5.74 T

First Published:12 Jun 2024, 10:22 PM IST
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