Mr. Mitul Shah - Head of Research at Reliance Securities.
Indian equities ended slightly higher as markets await the US Fed's rate decision. Nifty was up 0.3%. Broader markets moved largely in-line with the main indices as Nifty Mid Cap and Nifty Small Cap were up 0.3% and 0.5% respectively. Majority of sectoral indices ended in green. Nifty Pharma and Nifty Healthcare were the major gainers, up 1% each followed by Nifty PSU Bank which was up 0.8%. Nifty Auto and Nifty FMCG were higher by 0.5% and 0.4% respectively.
U.S. equities rose with shares of regional banks including First Republic Bank at the forefront of the rally. The S&P 500 gained 1.3%, the Dow Jones rose 1.0% and the tech-focused Nasdaq climbed 1.6%. The yield on the 10-year note climbed to 3.603% from low of 3.3% on Monday. There is uncertainty among investors about what the Fed will do as it attempts to balance financial strains against stubbornly high inflation. In Europe, bank stocks and bonds also recovered, following choppy trading on Monday sparked by UBS's emergency takeover of Credit Suisse. UBS's stock climbed 12%. Additional tier 1 bonds ticked higher, with a roughly $1 billion AT1 exchange-traded fund from Invesco gaining about 0.8%.
The markets will closely follow global cues and the developments in the US and European banking system. Domestically, CPI and WPI have cooled and trade deficit has narrowed. Brent crude prices have corrected 10% since the start of the US banking crisis which coupled with the cheaper crude from Russia and the fall in natural gas and coal prices is a huge tailwind for the Indian economy. However, the unseasonal rains this week have caused large scale crop damage across large swathes of India. This is likely to keep food prices higher in the coming months. All eyes will be on the US Fed monetary policy meeting and its interest rate decision due tonight.