Domestic equities started flat with a negative bias on Wednesday. They further extended their decline ahead of the US Federal Reserve’s meeting minutes which could throw some light on the US central bank’s interest-rate hiking path in 2023. By noon, the Sensex was down 638.80 points, or 1.04 percent, to 60,655.40, and the Nifty lost 191 points, or 1.05 percent, to 18,041.50.
In the broader markets, the BSE MidCap and SmallCap indices fell up to 1 per cent. All sectors, too, plunged in the sea of red. The Nifty Metal and Realty indices lost over 1 per cent each. At the same time, volatility on Street remained high as India VIX spiked over 6 per cent to 15.53.
Globally, investors are keenly monitoring minutes of the Federal Open Market Committee (FOMC) December meeting that will indicate the signs of interest rate hike trajectory in the new year. The minutes will be released later tonight. Apart from global trends, Indian investors will also keep an eye on corporate earnings to get a better sense of the economy.
FOMC Minutes
At the conclusion of the December 13-14 meeting of the FOMC, the interest rate was hiked by 50 basis points (bps) to a target range of 4.25 per cent to 4.5 per cent. While this was a step down from 75bps, policymakers published new projections on higher inflation expectations.
Officials now see inflation ending 2023 at 3.1 per cent, according to their median projection, compared with 2.8 per cent in the previous quarterly forecast released in September.
US Stock Market Begin 2023 on a Weak Note
US Stock market ended Tuesday’s session in the red. The Dow Jones Industrial Average (DJIA) fell 10.88 points or 0.03 per cent to 33,136.37 while the tech-heavy Nasdaq Composite Index dropped 79.50 points or 0.76 per cent to 10,386.98 and the S&P 500 dipped 15.36 points or 0.40 per cent to end at 3,824.14.
Six of the 11 major S&P sectors closed lower, led to the downside by energy. This negative start came as a double whammy after Wall Street’s major averages notched their worst year since 2008.
Brent Crude
Brent crude March futures declined 0.07 per cent to $82.04 a barrel and US West Texas Intermediate (WTI) crude futures decreased 0.21 per cent to $76.77 a barrel.
2023 Will be Tougher than the Last Year: IMF Chief
International Monetary Fund chief Kristalina Georgieva has said that up to a third of the world could be in recession and even those countries that are not in recession would feel like recession for lakhs of people.
“The year 2023 will be tougher than the last year because the economies of the US, the EU and China will slow down,” she said in an interview to CBS.
Profit-booking
“Markets have been moving in a narrow range of 18,000-18,200 over the past few days. Some sectors like banks and metals had witnessed buying, which are seeing profit-booking today,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services.
Anand James – Chief Market Strategist at Geojit Financial Services, said: “Though the moves yesterday lacked the momentum to go all the way to our objective of 18,400, positive bias prevailed. Similar trend is expected today as well with 18,400 continuing to be in sight. Alternate scenarios see consolidation inside the 18,250-150 region, with the downside marker placed at 18,000, until which, the fears of a 17,500 plunge will be on hold.”
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