As the US Federal Reserve hiked interest rates by 25 bps, SGX Nifty hinted that the domestic equity indices could see a start in the red on Thursday. On the Singapore Exchange, Nifty futures were trading lower, down by 49.5 points, at the 17,108.5 level. On Wednesday, the markets rose for the second consecutive session after a range bound session. At close, Nifty was up 0.26% or 44.4 points at 17151.9 while Sensex settled at 58,214, 0.24% higher.
“Volumes on the NSE were the lowest in more than 9 months. Smallcap index rose more than the Nifty even as the advance decline ratio remained high at 1.64:1. Asian stocks rose on Wednesday while European stocks struggled for momentum after a tentative recovery in the past two sessions. UK’s inflation unexpectedly accelerated to 10.4% in February,” said Deepak Jasani, Head of Retail Research, HDFC Securities.
Key things to know before share market opens
Wall Street Overnight
Wall Street gyrated to end sharply lower on Wednesday after the U.S. Federal Reserve delivered a widely expected 25 basis point policy hike, while hinting that it was on the verge of pausing future increases in view of recent turmoil in the financial sector. The three major U.S. stock indexes, which were mostly directionless prior to the Fed announcement, jumped higher then deflated as investors digested the accompanying statement and Chair Jerome Powell’s subsequent Q&A session. By the closing bell, the Dow Jones Industrial Average fell 1.63%, the S&P 500 lost 1.65% and the Nasdaq Composite dropped 1.6%.
Stocks in Asia-Pacific traded mixed, despite Wall Street’s close in the deep red. Japan’s Nikkei 225 lost 0.45%, and South Korea’s Kospi lost 0.26% in its first hour of trade. China’s Shanghai Composite and Shenzhen Component traded up by 0.04% and 0.67%, respectively. Hong Kong’s Hang Seng index gained 0.17%.
Oil prices fell on Thursday following three sessions of gains, after U.S. Federal Reserve Chair Jerome Powell re-stated his commitment to curbing inflation, including the possibility of more interest rate rises. Brent crude futures fell 80 cents, or 1%, to $75.89 a barrel by 00:09 GMT, while U.S. West Texas Intermediate crude (WTI) dropped 84 cents, or 1.2%, to $70.06. Both crude benchmarks had settled on Wednesday at their highest close since March 14.
Foreign institutional investors (FII) net bought shares worth Rs 61.72 crore, while domestic institutional investors (DII) net acquired equities worth Rs 383.5 crore on 22 March, according to the provisional data available on the NSE.
The National Stock Exchange has Biocon and IndiaBulls Housing Finance on its F&O ban list for 23 March. According to the NSE, stocks are prohibited in the F&O sector when they have exceeded 95% of the market-wide position limit (MWPL). During the F&O ban period, no new positions are permitted for F&O contracts in that stock.
“The short term trend of Nifty remains positive. But, the market is not gaining momentum through the hurdle. Unless the immediate resistance of 17200 is taken out decisively on the upside, the chances of sharp up-move could be less. The market is also waiting for the cues from the Fed outcome in the US on Wednesday. Immediate support is at 17020 level,” said Nagaraj Shetti, Technical Research Analyst, HDFC Securities.
Bank Nifty Technical View
“The Bank Nifty index has remained mostly sideways as the investors preferred waiting until after the Federal Reserve meeting on the rates and the follow-up commentary, which is more important. On the higher end, the index has found resistance at the 14DMA during the day’s trade. The momentum indicator is in bullish crossover. A decisive breakout above 40,000 may induce a rally in the index, above which the index may move up towards 40,500/41,000 over the near term. On the lower end, support lies at 39,500,” said Rupak De, Senior Technical Analyst, LKP Securities.
US Fed Rate Hike
The US Federal Reserve increased the rate hikes by 25 basis points on Wednesday, as the country and globe dealt with the aftermath of the SVB and Signature Bank-induced turmoil. The move set the U.S. central bank’s benchmark overnight interest rate in the 4.75%-5.00% range. Additionally, the Fed’s latest policy statement no longer says that “ongoing increases” in rates will likely be appropriate.