Morning view on the market by Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

 

The Fed decision to ‘skip’ rate hikes was overshadowed by the more hawkish-than-expected commentary. The Fed chief’s comment that “ nearly all committee participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year” is negative news. The Fed now expects the Fed funds rate to be around 5.6% by end 2023 and 4.6% by end 2024. Interest rates remaining higher for longer will impact global growth which has slightly negative implications for global markets.India has the best growth-inflation balance among large economies with resilient growth and falling inflation. So, domestic cyclicals will do well, going forward. Investors may focus on financials, automobiles, capital goods and construction-related segments.