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Domestic markets are expected to open on a flat note on Thursday despite the weak closing of US stocks. SGX Nifty at 17,131 indicates a gap down opening of 17,185 but on recovering phase. It recovered after hitting a low of 17,075.
Analysts expect the market to remain volatile as investors are gauging Fed’s impact. The US stocks plunged sharply after Yellen’s statement.
Wall Street’s initial take on the Fed was that they delivered a dovish hike and that banking turmoil will finish the job of bringing inflation back to target, said Edward Moya, Senior Market Analyst, The Americas OANDA.
Also read: Indian economy better positioned than many countries: RBI bulletin
Yellen’s statement
“The Fed Chair Powell started the press conference by noting that the banking system is sound but Treasury Secretary Yellen put a wrench in that idea. Yellen noted that regulators are not considering a broad increase in deposit insurance. Yellen said she is not considering a broad increase in deposit insurance despite all the discussion around blanket deposit insurance. It sounds like we are nowhere near having a debate on whether to raise FDIC limit above $250,000,” Moya further said.
Asian stocks are relatively stable. Equities across-the-region down between 0.2 per cent and 0.6 per cent
According to Madhavi Arora, Lead-Economist, Emkay Global Financial Services, markets are again vastly divided, debating if the Fed will finally pivot, especially as concerns about financial contagion persist.
Also read: Lessons from global banking crisis
“We maintain the Fed will go ahead with a 25bps hike, with enough dispersion in the dot plot. Powell will likely distinguish between the inflation fight and supporting financial stability via regulatory tools, in the absence of any systemic event. That said, the FOMC might reckon that speed kills and contagions are difficult to manage. Hence, forward guidance could be hazy despite a likely unchanged 2023 median rate,” she had said ahead of the Fed decision.
India VIX slowed down intraday and closed below the 15 level. According to a note by Choice International, the Nifty Put Call ratio stands at 0.92. Open interest data indicates, on the call side, the highest OI was witnessed at 17,500 followed by a 17,400 strike price while on the put side, the highest OI remained at a 17,000 strike price.
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