Markets end lower as US Fed flags faster rate hike

Benchmark indices settled the day on a lower note amid choppy trade as investors remained cautious on US Federal Reserve's hawkish outlook for 2017.
 
Markets swung between gains and losses throughout the day as Sensex fell almost 200 points during early trade but later pared losses to rise 135 points later in the day. Nifty50 also danced between 8,100-8,200 levels.
 
FMCG, telecom, pharma and auto stocks were under pressure while technology stocks continued to support the market.
 
S&P Sensex ended the day 84 points lower at 26,519 while Nifty 50 settled the day at 8,154, down 29 points. In broader markets, BSE Midcap remians unchanged while BSE Smallcap indices gained 0.21%.

"Going forward market is likely to stay volatile as the market is likely to take some time to absorb the Federal Reserve's first interest rate rise this year. Higher interest rates in the US would attract foreign investments from emerging markets towards the US. This also will put stress on rupee as the dollar will strengthen. Overall important support zone is at 8,170 and on the upside resistance around 8,250, which is likely to offer medium-term supply," said Rohit Gadia, Founder & CEO, CapitalVia Global Research in a note.
 
Meanwhile, Gold dropped to its lowest in over 10 months on Thursday as the dollar surged to its highest in 14 years after the Fed rate hike. Rupee also continued to trade weak throughout the day.
 
Sectors and Stocks
 
IT index ended the day almost 1% higher and was the top sectoral gainer in both the headline indices. The gains were led by TCS, HCL Tech and Wipro.
 
According to analysts at Antique Stock Broking, Indian IT industry after slowdown in revenue growth in CY16 is witnessing positive tailwinds from the improving US economy.
 
Axis Bank, ONGC, SBI and M&M were the top gainers on BSE Sensex while Sun Pharma was the biggest laggard. Other losers included NTPC, Tata Motors, ITC and Cipla.
 
Among other stocks, Indraprastha Gas hit a record high of Rs 909, up 4.5% on the BSE in intra-day trade in otherwise volatile market. The stock ended the day over 4.29% higher.
 
Shares of NALCO fell 9% to Rs 60 on the BSE in intra-day trade to end the day 7.78% lower after the company reported 52% YoY drop in its net profit at Rs 121 crore for the quarter ended September 30 due to poor performance of chemical business.
 
ONGC moved higher by 2.4% to Rs 209 in late noon deal to settle the day 1.42% higher, bouncing back nearly 4% from intra-day low on the BSE, in otherwise volatile market. The stock hit a low of Rs 201 in early morning trade.
 
Rate hike
 
Maintaining a hawkinsh outlook for 2017, US Federal Reserve signalled a faster pace of hikes in 2017 and 2018, heightening fears that higher interest rates in US would trigger foreign investment outflows from emerging markets including India towards the US.
 

“A 25 bps hike is already discounted by the markets. A steady hike from here on will depend on the fiscal action taken by the new President in the months to come. As of now, we believe that Fed may not make hawkish statements about future rate hikes," said Kamlesh Rao, CEO, Kotak Securities.

Global Markets

Asian shares and currencies softened on Thursday after the Federal Reserve raised rates for the first time in a year and hinted at the risk of a faster pace of tightening than investors were positioned for.
 
Yields on short-term U.S. debt surged to the highest since 2009, sending the dollar to peaks not seen in almost 14 years, which in turn prompted China's central bank to set the yuan at its weakest level against the greenback since 2008.
 
The Fed's anticipated policy path, and expectations US President-elect Donald Trump will set growth on a higher gear, are keeping Asian policymakers on edge as capital gets sucked out from the fragile export-dependent regional economies toward dollar-based assets.
 
European shares fell from an 11-month high on Wednesday, with Switzerland's Actelion slumping after U.S. healthcare company Johnson & Johnson ended discussions over a potential deal with Europe's largest biotech firm.
 
The pan-European STOXX 600 ended down 0.5%, with healthcare and consumer staples sectors the biggest drags on the benchmark index.