Nifty ends at record high despite US Fed’s hawkish stance

The Indian markets continued its bull run on Thursday despite weak global cues post Federal Open Market Committee meet. Asian markets were nervous on Federal Reserve’s hawkish stance as a rate hike is expected to prompt traders and investors to park funds in dollar denominated assets.

However, analysts said that the Fed decision is a non-event for India and the markets are prepared for two rates this year. Anup Maheshwari, executive vice-president, head, equities & corporate strategy, DSP Blackrock Investment said that the Indian markets have priced in Fed rate hikes. “Though rate hike by Fed is negative for India, historically there has been no negative correlation between Fed rate hike and markets.”

The Nifty ended at a record high at 9,365.65. The Nifty’s previous record closing of 9,351.85 was registered on April 26.

Bank Nifty closed at an alltime high of 22,720.10 after touching an intra-day record peak of 22,743.70, with Canara Bank, SBI, Axis Bank, Bank of Baroda, Punjab National Bank, IDFC Bank and Federal Bank rising up to 6.47%. Shares of ICICI Bank hit a 52-week high of ₹299.90, before settling 9.24% higher at ₹297.95, driven by a five-fold jump in March quarter profit.

The Sensex ended up 231.41 points, or 0.77% at 30,126.21 — its highest level since April 26 when it closed at a record 30,133.35.

Vinod Nair, research head, Geojit Financial Services Ltd said: “Government’s one step closer to NPA policy and national steel policy had given some energy to the market. Banks are in sweet spot due to new framework to deal with NPA and better quarter results.”

Markets are in a tear after touching record highs in April. The Sensex gained 13.14%, Nifty rose 14.34% in 2017 so far.

Maintaining its hawkish stance, the Fed indicated that despite growth slowdown in the first quarter, it may raise rates two more times this year. It kept interest rates unchanged but said that weak economic growth in the first quarter is likely to be “transitory” after its two-day meet concluded on Wednesday night.

At its last meeting in March, the Fed had raised its benchmark rate by a quarter percentage point to a target range of 0.75-1%.