Stock market falls as fed’s meeting minutes intensify tension on D-Street: IBT Market Watch

The domestic indices tanked after opening on a flat note on Thursday as Fed’s meeting minutes intensified tension on D-Street. Fed increased the Federal funds rate to 50 basis points to 4.5% in the last FOMC committee concluded in mid-December 2022.

Powell said in a December press conference, “The inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases.”

Continuing his statement, he also added, “But it will take substantially more evidence to give confidence that inflation is on a sustained downward path.”

On that day (15th December 2022), domestic benchmark indices declined by over 1%. Twenty days after the rate hike announcement, the fed released the minutes of that meeting which only amplified the message that the Fed is not going to go easy on inflation and pause further rate hikes prematurely.

The BSE Sensex opened slightly above the previous close at 60,847 points, while NSE Nifty-50 started trading at the 18,100 level and Nifty Bank opened above the 43,000 mark.

As of 1:20, Sensex dipped almost 450 points or 0.7% to 60,204 points, while Nifty plunged below the psychological level of 18,000 to 17,940 points and Bank Nifty lost almost 500 points or 1.2% to 42,466 points.

Commenting on Nifty outlook Anand James, Chief Market Strategist, Geojit Financial Services, said, “An outright collapse is less expected early today though. Favoured view expects renewed bargain hunting from the 18000 vicinity, but we would wait for a breach of 18150 to confirm strength. Alternatively, direct fall below 17960 will allow bears to continue dominance with nearest support seen at 17670.”

Commenting on a market outlook, Prashanth Tapse – Research Analyst, Senior VP (Research), Mehta Equities, said, “Markets are expected to make a firm start on Thursday tracking positive global cues even as the US FOMC minutes showed no indication of going slow on rate hikes in the new year.”

“Besides, local traders are taking the opportunity to book profit as concerns of higher valuations weigh while global macroeconomic concerns continue to remain a major worry.” He added.

Wall Street seemed to have shrugged off the meeting minutes from Fed as it closed higher on Wednesday. The Dow gained 133 points or 0.4%, while S&P 500 climbed 0.75% and Nasdaq rose 0.7%.

Peter Boockvar of Bleakley Financial Group said, “The Fed is juggling a lot of balls here in the sense they want to slow the pace of rate increases but they don’t want the market to start a party, which would then ease financial conditions.”