The equity market has been under strong pressure in the last few days after the US Fed lifted rates for the third consecutive time and reiterated its strong resolve to continue with rate hikes to keep inflation under check.
Due to the rate hikes and the dollar's strong gains, foreign portfolio investors (FPIs) have been on a selling spree of Indian equities for the last few days. As Mint reported, FPIs have been net sellers of equities worth more than ₹17,000 crore since 14 September and the Nifty has corrected by 1,100 points.
"The monthly trend that had turned positive since July and contributed to a rebound in the markets has seen a reversal in September with FPIs having sold equities worth ₹5,156 crore till the 27th. The provisional data for 28th suggests that FPIs sold equities worth ₹2,772.49 crore in net value," the report further added.
Apart from rate hikes, geopolitical tensions, sticky inflation, and the fears of a recession are also among the factors that have kept the market in the doldrums.
The Reserve Bank of India (RBI) is also expected to hike rates on September 30. Brokerage firm Motilal Oswal Financial Services is of the view that the RBI should hike policy rates by 35bp this week, followed by another 25bp in Dec’22.
"With a deteriorating global economic environment and currency market movements, the RBI may choose to announce another 50bp hike this week," said Motilal Oswal.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.