Why Sensex, Nifty climbed today despite US Fed’s first rate hike in 3 years

US Federal Reserve All six remaining sittings in 2022 indicated a quarter-percentage increase in rates and a signal increase to curb inflation. President Jerome Powell said the US economy is “very strong” and can handle the monetary crunch.

“The Fed’s forecast of another six hikes this year is bullish and, therefore, the smart rally in the markets was slightly unexpected, with the S&P 500 and Nasdaq posting up 2.24% and 3.7% respectively. The explanation is that the market was oversold and The result was lower, said VK Vijayakumar, chief investment strategist at Geojit Financial Services, adding that markets were given confidence by Fed chief Powell’s statement that “the US economy is very strong.”

Short-covering will increase in India too Share Market Today, FPIs are becoming buyers after a long time and the market will be supported by the softening of crude oil. Vijayakumar said, there is an upward trend in the financial sector, especially in high quality private banks in which FPIs were constant sellers.

The aggressive rate hike outlook comes as a response by the US to rising commodity prices on account of geopolitical tensions and supply disruptions and rising inflation coupled with downside risks to global growth.

While the Fed said the economy is on a strong footing and growth is strong, we think the rate hike cycle will be better navigated this time around. From the Indian market perspective, while the impending Fed rate hike is already strong. Sold by FIIs over the past few months, strong support for DIIs has largely offset the impact of FII selloff. We expect the market to take this rate hike cycle in its stride, as inflation constraints hit. Despite this, the prospects remain strong and navigate the unknown to the known, said Neeraj Kumar, Chief Investment Officer, Future Generali India Life Insurance.