Market falls again as Fed minutes hint at march hike

Mumbai: Market sentiments remained depressed for the second day as the stand-off on the Russia-Ukraine border remained grim and the US Fed minutes of January 25-26 meeting indicated interest rate hike and aggressive unwinding of the Fed's balance sheet as early as March 15-16, when US Fed officials meet next.

On Thursday bank stocks were the top losers, NSE's Bank Nifty and BSE's Bankex indices saw higher fall by 1.11 per cent and 1.15 per cent, respectively, while the benchmarks Sensex and Nifty-50 closed 0.10 per cent to 0.18 per cent lower.
The Sensex closed at 57892 down by 104.67 points or 0.18 per cent while the Nifty-50 closed at 17304.60 down by 17.60 points.

Foreign portfolio investors were net sellers by Rs 1,242.10 crore while the domestic institutions supported the market by Rs 901.10 crore worth buying.

As per US Fed minutes released late on Wednesday, the US central bank intends to shortly begin raising interest rates, but its decisions would be data-dependent.

The Fed minutes also indicated aggressive unwinding of the bond portfolio, as the committee set out procedures for how it will start unwinding its nearly $9 trillion balance sheet, which consists largely of bonds it has purchased in an effort to drive down rates and stimulate growth during the pandemic.

Minutes of the Federal Open Market Committee (FOMC) meeting show members noted that inflation was beginning to spread beyond pandemic-affected sectors and into the broader economy.

On Thursday US stock futures declined following the release of the FOMC meeting minutes, which impacted global markets, including the Indian market.
NSE's volatility index India VIX also rose 6.85 per cent to 22.01, indicating higher volatility ahead.