US Fed meeting outcome today: How will it impact the Indian stock market?

According to experts, a hawkish commentary by Federal Reserve can have a negative impact on the Indian markets.

Vaamanaa Sethi
First Published1 May 2024, 12:56 PM IST
The Dream of Fed Rate Cuts Is Slipping Away
The Dream of Fed Rate Cuts Is Slipping Away

All eyes are now on the Federal Open Market Committee (FOMC) meeting of the US Federal Reserve, which is scheduled for two days, from April 30 to May 1. Fed chair will be announcing the decision on interest rates—whether to decrease, increase, or maintain the current status quo—on May 1 at 2 p.m. ET.

This time, the market anticipates no rate reduction due to inflation persisting above the Fed's 2 percent target. The Fed is cautious about avoiding a premature rate cut that might worsen inflation, particularly amidst volatile commodity prices influenced by geopolitical tensions.

Also read: US Fed meet begins today: What to expect amid sticky inflation? Top experts share their views

According to data released by the Labor Department's Bureau of Labor Statistics on April 10th, the US consumer price index (CPI) increased by 0.4 percent month-on-month (MoM) and 3.5 percent year-on-year (YoY), surpassing Street expectations of 0.3 percent MoM and 3.4 percent YoY.

Indian investors also will be closely watching how the Fed addresses the dilemma of balancing growth and inflation.

How Fed's policy meeting outcome will affect India's stock market?

According to experts, a hawkish commentary by Federal Reserve can have a negative impact on the Indian markets.

“If fed commentary is hawkish then it will have negative impact on Indian Markets. Fed may not go for rate cut in the near future due to higher inflation numbers recently. The FOMC members are expected to keep rates unchanged at the end of their policy meeting on Wednesday, but their forward guidance will be closely watched as a more hawkish tone could push the U.S. dollar and Treasury Yields higher and weigh on risk assets and equities,” Tejas Shah, Technical Research, BlinkX & JM Financial, told Livemint.

The Federal Reserve meeting primarily centers on economic indicators such as GDP, PCE, and job data, rather than solely on interest rates.

Also read: India VIX: Market volatility may rise ahead of election results, gains capped over priced-in stability; here's why

Rahul Kalantri, VP Commodities at Mehta Equities, said, “No interest rate hike decision is expected tomorrow, minimizing potential impact on equity markets. Market analysts are attentively monitoring Federal Reserve commentary for insights into the upcoming June meeting.”

Experts also believe that the decision is unlikely to have a meaningful impact on the Indian market. “Our expectation is that the US Fed will continue to keep the interest rates unchanged at 5.5 per cent. The decision is unlikely to have any meaningful impact on the markets. However, markets will closely watch out for the commentaries from the Fed governor,” said Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities.

 

 

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First Published:1 May 2024, 12:56 PM IST
HomeMarketsStock MarketsUS Fed meeting outcome today: How will it impact the Indian stock market?

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