After opening the day on a positive note, stock markets in India have continued their momentum. Sectoral indices are trading on a positive note with stocks in the realty sector and telecom sector witnessing maximum buying interest.

The BSE Sensex is trading up 310 points (up 0.9%) and the NSE Nifty is trading up 98 points (up 1%). Both – the BSE Mid Cap index is trading up by 1%, while the BSE Small Cap index is trading up by 1.2%. The rupee is trading at 65.21 to the US$.

Market participants are keeping a close watch on the ongoing Federal Reserve policy meeting to track the decision on an interest rate hike.

This is the first policy under new Fed chief Jerome Powell. The Federal Reserve is expected to hike US interest rates and perhaps signal that as many as two more lie in store for the rest of the year.

In its last meeting, the Fed said it expects “further gradual” rate increases. The target range for the federal funds rate currently is 1.25% to 1.50%.

Note that with the US economy chugging along for many months, the Fed is now gradually easing off the stimulus it provides to the economy by raising interest rates to more normal levels.

How does a US interest rate hike affect Indian investors?

The instant effect is foreign money moving out of India’s vaults. This means a slight correction in the share market in India, albeit temporarily.

While this might provide a good buying opportunity in long-term stocks, the main thing to look forward would be capex and earnings trends.

In the news from the steel sector, Trade Minister Suresh Prabhu said India will bilaterally discuss import curbs on steel with the United States.In the end, Indian investors are better off staying informed about the corporate earnings revival than Fed rate hikes.

The announcement comes amidst growing concerns of an escalating trade war over tariffs. Prabhu told that the US was committed to the World Trade Organisation, even as Washington has raised concerns about the functioning of the WTO and asked for reforms.

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