After a day's break, Indian stock markets are expected to resume southward journey once again on Thursday, as US Fed remains hawkish. Today being the settlement of F&O monthly contracts on the National Stock Exchange, one could see higher volatility, said analysts.

Though the US Federal Reserve kept the rate unchanged, its Chief Jerome Powell gave enough indication of a rate hike from March as part of its fight to check inflation.

Apart from the US Fed stance, analysts also fear that the forthcoming Budget could be populist ahead of crucial five state elections.

SGX Nifty at 16,890 indicates that Nifty is likely to open about 400 points lower as Nifty futures on Tuesday closed at 17,283.45.

Fed outcome

"With inflation well above 2 per cent and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate," the US Federal Open Market Committee said after its two-day brainstorming session.

Besides, FOMC also said that it would moderate its asset-buying programme if the economy continues to do well.

"The Committee decided to continue to reduce the monthly pace of its net asset purchases, bringing them to an end in early March. Beginning in February, the Committee will increase its holdings of Treasury securities by at least $20 billion per month and of agency mortgage‑backed securities by at least $10 billion per month," FOMC said in the statement.

Following this, the US indices surrendered all their strong gains to end in the red.

Global stocks tumble

The S&P 500 closed 0.1 per cent lower after being up 2.2 per cent earlier while narrow the Dow Jones Industrial Average slipped 0.4 per cent after gaining over 500 points during the day. The Nasdaq closed flat after rising 3.4 per cent during the day.

Equities across the Asia-Pacific region slipped sharply in an early deal on Thursday. Japan's Nikkei and Australia's ASX edged down around 2 per cent each, while Korea's Kospi was the most affected by falling over 2.6 per cent.

Prashant Tapse, Vice President (Research) at Mehta Equities, said: "We remain cautious on markets in the backdrop of an anticipation of a populist budget ahead of 5 state elections".

According to SEBI Registered analysts Sonam Srivastava, Founder at Wright Research, Fear of Fed taper, increase in interest rates, and tightening of fiscal policy by the RBI are some reasons for not letting the market get confidence. The earning season hints at shrinking margins and a decrease in rural demand.

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