US Fed Rate Decision, Rupee Movement, Upcoming Elections To Impact Investors, Say Analysts

In the last trading week, the sentiment in the market was impacted by a sharp decline in smallcap, midcap firms, foreign fund outlfows, and surged crude oil prices

Experts noted that equity markets could remain volatile in the near-term as several central banks across the world are scheduled to reveal their monetary policy decisions in the week

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Markets will be driven by global macroeconomic data in the week, with the most prominent one being the US Fed’s decision on interest rate, analysts noted. The stock markets would be affected by the global trends along with the trading activity of foreign investors, the experts stated.

In the last trading week, the sentiment in the market was impacted by a sharp decline in smallcap, midcap firms, foreign fund outlfows, and surged crude oil prices. Experts noted that equity markets could remain volatile in the near-term as several central banks across the world are scheduled to reveal their monetary policy decisions in the week, reported PTI. 

Elaborating on the oultook, Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, said, “This week will place a significant focus on monetary policy, as the Fed will begin its two-day policy meeting on March 19. The US Federal Reserve will announce its interest rate decision after its two-day policy meeting on March 20, 2024.”

Gour added that China is also scheduled to reveal its loan prime rate for 1 and 5 year loans. The Bank of Japan (BoJ) will also announce its decision on interest rates on Tuesday, followed by a reveal of the inflation rate on Thursday. Currency fluctuations with respect to rupee and dollar, the US bond yields, and crude prices will also be keenly observed, he noted.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, stated, “With uncertainty around, local investors will closely follow global markets to decide on their exposure to equities.” 

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said, “This week will be important from an economic perspective as major central banks globally including Japan, the US, and the UK will announce interest rate decisions. The US Fed policy outcome and commentary will be important as mixed set macro data has kept investors anxious over the rate cut timeline. Thus, we expect the market to remain volatile in the near-term with a focus on largecaps and defensive names.”

Explaining the impact of the upcoming elections, Vinod Nair, Head of Research, Geojit Financial Services, said, “Investors' focus would now also shift to the upcoming Lok Sabha polls. The Lok Sabha polls will be held in seven phases spread over 44 days starting April 19 in the world's largest election. Counting of votes will be taken up on June 4. The week ahead, the global central bank's monetary policy decision will get investors' attention. The US Fed, BoJ, and BoE (Bank of England) will unveil their rate decisions.”

The BSE benchmark Sensex slipped 1,475.96 points or 1.99 per cent last week, while the NSE Nifty dropped 470.2 points or 2.09 per cent during the period. The BSE smallcap index plunged 2,640.82 points or 5.91 per cent, while the midcap index crashed 1,602.41 points or 4 per cent.