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Indian equity benchmarks halted 4-day gaining streak on Wednesday ahead of Fed outcome. Today, markets are likely to make gap-down opening tracking weak global cues after the Fed announced a 75-basis-point hike in benchmark interest rates. Traders will be eyeing on Services PMI data for October and RBI Monetary Policy Committee meeting. Monetary Policy Committee meeting today to discuss failure to curb inflation. There may be some cautiousness as Shanaka Jayanath Peiris, Division Chief of Regional Studies Division, Asia Pacific Department at the IMF, said the Asia Pacific region is facing three main risks, including due to global financial tightening and a slowdown in China. Peiris also said that currencies in the region have depreciated sharply while public debt ratios have increased. However, some support may come later in the day as Saket Dalmia, president, PHD Chamber of Commerce and Industry, said the wholesale price index (WPI) inflation has softened to 10.7 per cent in September 2022 from its peak of 16.2 per cent in June 2022. Dalmia said deceleration in the WPI inflation will continue and it will have a significant impact on the price corrections in the retail inflation; CPI inflation is expected to soften below 6 per cent by December 2022. Traders may get some support as Prime Minister Narendra Modi said his government has rolled out the red carpet for investors, instead of pushing them into the web of red tape. He added building a new India is possible only with bold reforms, big infrastructure, and best talent. The government’s proactive steps have led to a situation where India has been hailed as a bright spot amid the current global turmoil by experts and agencies. Traders may take note of report that Governor Shaktikanta has Das said the Reserve Bank of India wishes to concentrate on inflation in the same way as Arjuna focussed on hitting the eye of a revolving fish in the epic Mahabharata. The remarks come at a time when inflation is ruling high and RBI will soon be explaining to the government about the reasons for overshooting the inflation target for nine consecutive months. There will be some buzz in aviation stocks as Civil Aviation Minister Jyotiraditya Scindia said the country’s civil aviation sector is likely to log around 400 million passengers over the next 7 to 10 years. There may be some reaction on fertilisers stocks as the government approved a subsidy of Rs 51,875 crore for phosphatic and potassic (P&K) fertilisers for second half of 2022-23 as part of efforts to provide affordable soil nutrients to farmers.

On the global front, the US markets ended deeply in red on Wednesday after Federal Reserve Chair Jerome Powell said inflation was still too high and indicated that the central bank has more rate hiking ahead. The Fed implemented another 0.75 percentage point rate increase, and Powell said that its inflation fight was far from done. Asian markets were trading in red on Thursday after the US Federal Reserve laid the groundwork for a protracted tightening campaign that torpedoed market hopes for a pause, sank bonds and lifted the dollar.

Back home, Indian equity benchmarks snapped their four-session gaining streak and ended lower on Wednesday weighed by selling in Telecom, Realty and TECK stocks. Investors also remained cautious ahead of the outcome of US Federal Reserve’s rate announcement and guidance on future rate hikes due later in the day. After a positive beginning, key gauges failed to hold on to the gains and traded dull for whole day, as traders got anxious with a private report stated that market borrowing cost for the states remained high with the average yield hitting 7.83 per cent at the auctions held on Tuesday, which is a paltry 1 basis points lower than the last auction of state securities. Some concern also came with latest data released by the Centre for Monitoring Indian Economy (CMIE) that after the unemployment rate fell to a four year low in September, it rose to a four month high of 7.77 per cent in October. Sentiments remained weak in late afternoon deals, amid a private report stating that India's fast-depleting foreign exchange reserves are likely to drop more than was predicted just a month ago by end-2022 as the Reserve Bank of India will continue to shield the rupee from the dollar's strength. However, losses remain capped as some support came with provisional data available on the NSE showed that foreign institutional investors (FIIs) have net bought shares worth Rs 2,609.94 crore on November 1, 2022. Meanwhile, Finance Minister Nirmala Sitharaman said India will press for collective efforts to deal with the spillovers of happenings in advanced economies as well as global regulation of crypto assets to check terror funding under its G20 presidency. She outlined eight priority areas, including reforms in multilateral institutions and food and energy security, for discussion under its G20 presidency which will begin from December 1. Finally, the BSE Sensex fell 215.26 points or 0.35% to 60,906.09 and the CNX Nifty was down by 62.55 points or 0.34% to 18,082.85.

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