Indian stocks largely steady after US central bank policy minutes

NEW DELHI: Indian stock indices opened largely steady on Thursday morning. At 10.01 am, Sensex traded at 60,583.81 points, down just 73.64 points or 0.12 percent today, whereas Nifty traded at 18,042.85 points, down 0.100 points or 0.00055 percent.

"In India, the near-term challenge to the market comes from the sustained selling by FIIs who sold Rs 2620 crores equity in the cash market yesterday taking their selling spree to 9 consecutive days," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

In the US, in spite of the hawkish minutes, the markets closed in the positive territory on Wednesday because the markets expect a resilient US economy.

The US Federal Reserve officials believe it would not be "appropriate" to begin loosening monetary policy stance in terms of interest rate in 2023, Minutes from the latest policy meeting held on December 13-14 showed.

"No participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023," the document showed. Participating US central bank officials in general observed that a "restrictive policy stance would need to be maintained" until the incoming data provided confidence that inflation was on a sustained downward path to 2 percent, which the minutes said was likely to take some time.

The US Federal Reserve recently raised interest rates by 50 basis points (bps). The central bank's policy rate is now at a target of 4.25-4.50 percent, the highest level in 15 years. Prior to that, there has been a fourth consecutive hike of 75 basis points magnitude.

Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. In November, consumer inflation was at 7.1 percent.