Stocks bleed ahead of key US Fed meet
given prevailing worries about a potential bubble burst.
Last week, Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch spoke of “pockets of froth” in the market, pointing to the need for caution.
“Some people call it a bubble, some may call it froth. The question is, it may not be appropriate to allow that bubble or froth to keep building. Because if it keeps building, it will burst, because by definition, bubbles burst,” Buch said.
Meanwhile, investors are keeping a close watch on the
US Federal Reserve, whose rate-settingcommitteeismeeting over two days. Markets will parse every word of Federal Reserve chair Jerome Powell to figure out the interest rate cuts, which are expected to begin later this year. Markets expect three rate cuts already, but with the Bank of Japan raising interest rates for the first time in 17 years, the Fed commentary on Wednesday will be keenly awaited. The Federal Open Market Committee (FOMC) will announce its decision on Wednesday.
“The Fed will push back against market expectations of June rate cuts and speak of the inflation fight still being work in progress,” said Ajay Bagga, a market expert. Presidential elections are normally positive for the US markets, and that should help in providing a positive global backdrop this year, he added. “Fears of lower quantum and a reduction in the number of Fed rate cuts in 2024 on the back of recent US data have weighed on sentiment,” Saurabh Jain, assistant vice president of research at SMC Global, told Reuters. Hawkish commentary from the Fed on Wednesday could hurt foreign inflows, Jain added.
All said, India continues to remain in a sweet spot, given its strong growth prospects.
Investors could use steep corrections as buying opportunities, a UBS Global Wealth Management note dated 7 March said.