Mr. Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities
US FOMC turned out to be more hawkish than anticipated by the markets, increasing its rate forecast to 4.4% by the end of 2022. The indication is that 125 bps more rate hikes can be expected in the next 2 policy meetings scheduled this year. Following this, the US dollar index rose above 111, depreciating INR to beyond 80.5.
Indian stock market was able to sustain its resilience with limited cuts but if the rupee continues its weakness, domestic market would turn less attractive for foreign investors in the short-term, effecting performance.Benchmark indices swung bewteen gain and losses as it digested a 75-basis point interest rate hike by the US Federal Reserve. Weekly F&O derivatives expiry also played its part. Nifty settled at 17,630, down 89 points or 0.50 per cent. The level of 17430 is an important support level for Nifty. Any level below 17430 will confirm lower top and lower bottom formation which would be considered bearish. On the higher side, 17920 is a crucial resistance and unless that is taken out, aggressive longs should not be taken.
Amongst the sector, Nifty Media, FMCG and Auto were the top gainers while Nifty bank and OIL& Gas were the major losers. Nifty Midcap 100 and Smallcap 100 bucked the trend by gaining by 0.3% and 0.6% respectively. Advancing shares outnumbered the declining shares on Friday where advance decline ratio stood at 1.12 on BSE.
Volumes were higher side where cash market volumes on NSE stood higher by 10% as compared to yesterday and similar to average of last ten days.