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By Malvika Gurung
Investing.com — Dalal Street is witnessing a dull trading session on Thursday, as the market mood turns sour following a by the US Fed at its monetary policy announcement on Wednesday, forecasting higher rates for a longer period.
The US central bank raised the by 50 bps, as anticipated by the Street, snapping a 75 bps rate hike streak at the four prior FOMC meetings.
“The Fed is taking the pedal off the accelerator to some extent because its medicine (tighter monetary policy) is working. A lot of areas of high inflation are cooling off including the owner equivalent index, one of the biggest components of CPI,” said Eric Diton, president and managing director at The Wealth Alliance in an interview with Investing.com.
In a note provided to Investing.com, Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that even though the Fed downshifted the rate hike to 50 bp as expected, the tone of the commentary was unexpectedly hawkish.
Globally, equity markets would be watching out for the ECB and BoE decisions today, which are likely to be 50 bp hikes, he said.
“The Indian market, though not completely decoupled from the mother market US, has been charting a slightly different path exhibiting surprising resilience even in the face of global weakness. This is due to India’s superior growth and earnings prospects, going forward. However, high valuations and rising interest rates are likely to restrain the ongoing rally. Fixed income assets are becoming attractive,” Vijayakumar added.
On the pair, Kunal Sodhani, Vice President, Global Trading Center, Shinhan Bank expects 82.3 to act as a support and 82.8 as resistance. At the time of writing, the Indian rupee traded 82.45/$1.
“Yesterday was full of optimism that was poised to carry the into the 18,700-770 region. But we had no visibility past the same yesterday, given how oscillators were positioned for yesterday. This region will remain a barrier for upsides for now, and as maintained earlier, slippage below 18,560 would render the trend sideways, while collapse prospects need to be reconsidered only once in the 18,300-100 band,” said Anand James, Chief Market Strategist at Geojit Financial Services.
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