Global Rate Hike Cycle Hits Indian Stock Market
The Indian stock market is facing multiple headwinds, including high crude oil prices and persistent selling by overseas investors. The rupee has hit a record low, and the exposure to AI remains limited in India.
Hopes of a recovery in the final quarter of the year have weakened as the global interest-rate cycle has turned tighter. Global central banks have raised interest rates in response to rising inflationary pressures.
The US Federal Reserve hiked its federal funds target range to 3.75-4.00% in a unanimous decision, while the European Central Bank increased its deposit rate to 2.50%. The Bank of Japan raised its policy rate by 25 basis points to 1.25%, its highest level in 31 years.
Motilal Oswal Financial Services warned that a tightening global interest-rate cycle could put additional pressure on Indian equities through higher bond yields, tighter financial conditions, and weaker foreign investor flows.