Nifty likely to open 150 pts lower on Fed hike news

The Nifty could gap down by around 150 points or 0.8% at the opening, cues from its derivative SGX Nifty show. This comes after the US Fed delivered the third straight 75 basis point hike overnight, taking the Fed Funds Rate to 3-3.25% range, the highest since before the 2008 Global Financial Crisis, and as priced in by the markets.

The Nifty closed lower at 17,718 points on Wednesday and SGX traded lower at 17,569 points as of the writing.

However, the US Dow and the Nasdaq tanked by 1.7% and 1.79% each overnight after the hawkish Fed chair tone underscored the appropriateness of ongoing rate hikes to take inflation to the 2% target. Asian heavyweights HSI down 1.57% and Nikkei 500 down 0.74% as of writing took cues from the lower US market closing overnight.

Bears in India have sold more calls than puts on Nifty options just ahead of the FOMC outcome on Wednesday. They will profit from a fall in the call values if the market opens sharply lower. Nifty range for the month is 17000-18000.



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