Nifty, Sensex Start In The Red As Fed Minutes Stir Debate On Rates

Indian equity benchmarks started on the backfoot on Thursday, snapping a long winning streak, as global cues pointed to sell-off in risk assets after after minutes from the Federal Reserve’s July meeting stirred debate on the direction for US interest rates.

The 30-share BSE Sensex index fell 106.42 points, or 0.18 per cent, to 60,153.71 and the broader NSE Nifty index opened 39.50 points, or 0.22 per cent, lower at 17,912.15.

Stocks on Wall Street fell broadly for the first time since the start of this week as the Fed did not give a clear direction on in its July meeting minutes published on Wednesday.

The odds of a 75 basis points rate hike by the Fed in September dropped to 35 per cent, according to the CME FedWatch tool, as the minutes showed the US central bank’s interest rate hikes could slow at some point if inflation continues retreating from the four-decade highs seen earlier this year.

But it also said some policy-makers on its Federal Open Market Committee wanted rates to be retained at a “sufficiently restrictive level” for an appreciable period of time to stop inflation in its tracks.

“The data-dependent central bank is looking at a strong economy that could handle at the very least a couple more massive 75 basis-point rate hikes if inflation does not cool quickly,” Ed Moya, an analyst at online trading brokerage OANDA, told ANI.

Until the Fed’s July meeting minutes released on Wednesday, traders have been betting on the central bank raising interest rates by just 50 basis points at its next meeting in September, versus previous wagers for a 75 basis-point hike.