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Market ends lower after Fed rate hike; Nifty ends below 17,650
(15:40, 22 Sep 2022)
The headline equity indices closed with modest losses on Thursday amid negative global cues. The Nifty ended below the 17,650 level. Media, FMCG and auto stocks saw buying demand while bank and financial services shares saw a bit of selling pressure. Trading was volatile due to the expiry of weekly index options on the NSE today.

As per provisional closing, the barometer index, the S&P BSE Sensex, slipped 337.06 points or 0.57% to 59,119.72. The Nifty 50 index declined 78.50 points or 0.44% to 17,639.85.

In the broader market, the S&P BSE Mid-Cap index added 0.32% while the S&P BSE Small-Cap index rose 0.47%

The market breadth was positive. On the BSE, 1,839 shares rose, and 1,607 shares fell. A total of 143 shares were unchanged.

The US Federal Reserve hiked its key interest rate by 75 basis points on Wednesday for the third consecutive time. The central bank's officials forecast the target range for the benchmark policy rate to rise to 4.4% by the end of 2022 and reach 4.6% in 2023, as per the updated quarterly estimates published in conjunction with the statement.

The central bank has reiterated its commitment to fighting the decades-high inflation and works to push it under the targeted 2% range. The FOMC in its statement on Wednesday underlined that it is 'Highly attentive to inflation risks'.

With the 75-bps rate hike on Sept 21, the benchmark policy rate now lies in the 3-3.25% range, the highest level since before the financial crisis of 2008.

The projections by Fed officials indicate a probable fourth 75-bps rate hike in the next FOMC meeting in November.

Following this, the Indian Rupee on Thursday hit a fresh record low against US dollar. The currency opened at 80.2775 and touched a fresh all-time low of 80.7450 so far in the day's trading sessions.

Economy:

The Union Cabinet on Wednesday (21 September 2022) approved the Ministry of New & Renewable Energy's proposal for implementation of the Production Linked Incentive Scheme (Tranche II) on 'National programme on High Efficiency Solar PV Modules', with an outlay of Rs 19,500 crore. The national programme on High Efficiency Solar PV Modules aims to build an ecosystem for manufacturing of high efficiency solar PV modules in India, and thus reduce import dependence in the area of Renewable Energy.

Meanwhile, The Union Cabinet also approved the National Logistics Policy. The vision is to develop a technologically enabled, integrated, cost-efficient, resilient, sustainable and trusted logistics ecosystem for accelerated and inclusive growth. The policy lays down an overarching interdisciplinary, cross-sectoral, multi-jurisdictional and comprehensive policy framework for the logistics sector.

Stocks in Spotlight:

Fortis Healthcare slumped 14.41% after the Supreme Court ordered a forensic audit of the share sale in Fortis Healthcare in 2018 and refused to allow the open offer from Malaysia's IHH Healthcare to proceed. SC on Thursday (22 September) refused to lift the block on completion of the takeover of hospital chain Fortis Healthcare by Malaysian operator IHH Healthcare Bhd.

Malaysian major IHH Healthcare acquired a 31% stake in Fortis Healthcare in 2018 for $1.1 billion through a bidding process. The acquisition triggered a mandatory open offer for IHH to acquire another 26% stake in Fortis.

Heritage Foods declined 2.11%. The board of the dairy enterprises is scheduled to meet on Friday, 30 September 2022, to consider raising funds by issuing equity shares on a rights basis.

Ashoka Buildcon gaind 2.43% after the company announced that it received a letter of acceptance (LOA) from the South Western Railway (SWR) for a construction project worth Rs 258.12 crore. The completion period is 24 months from the date of appointed date.

KPI Green Energy advanced 3.08% after the company announced the receipt of a new order of 5.40 MW under wind-solar hybrid power project under CPP segment. The power producer said that it has received a new order for executing wind-solar hybrid power project of 5.40 MW (comprising of 5.40 MW wind turbine and 4 MWdc solar) capacity from Surat-based Greenlab Diamonds LLP under the 'captive power producer (CPP)' business segment of the company.

Suzlon Energy surged 11.59% after the company said that its board will meet on Sunday, 25 September 2022 to consider and approve the terms and conditions of the rights issue including determination of the price.

Kirloskar Oil Engines (KOEL) gained 2.07%. The company announced its plans to acquire balance 24% stake in Ahmedabad-based La-Gajjar Machineries (LGM). The company had acquired 76% stake in LGM in the year 2017 with an agreement that the balance holding will be acquired by KOEL over a 5-year period. By completing the acquisition as per previously agreed timelines, LGM will become a 100% subsidiary of KOEL.

KP Energy hit an upper circuit of 5% after the company announced that it has secured an order for development of 8.1 megawatt (MW) hybrid power project (comprising of 8.1 MW wind capacity and 6 MW solar capacity) in Gujarat. The project is scheduled for commissioning under the Gujarat Hybrid Power Policy, 2018.

Aptus Value Housing Finance India jumped 6.27% after a foreign brokerage reportedly initiated coverage on the stock with a 'buy' rating and a target price of Rs 425. The brokerage reportedly cited that the affordable housing financier could provide strong earnings growth in the coming years driven small size and 'good' execution track record that should enable a 29% annualised growth in assets under management over the next three years.

Global Markets:

Shares in Europe and Asia declined on Thursday after the U.S. Federal Reserve raised interest rates and signaled further hikes ahead.

The Bank of England raised its key interest rate to 2.25% from 1.75% on Thursday and said it would continue to respond forcefully, as necessary to inflation, despite the economy entering recession. This is its seventh consecutive rise and takes U.K. interest rates to a level last seen in 2008.

Meanwhile, the Swiss National Bank on Thursday raised its benchmark interest rate to 0.5%, a shift that brings an end to an era of negative rates in Europe.

The Bank of Japan decided Thursday to keep its current massive monetary easing policy unchanged, making even more apparent its different policy stance from those of U.S. and European central banks. The BOJ Policy Board unanimously voted to keep its short-term policy interest rate at minus 0.1% and continue to guide 10-year government bond yields around 0%.

Wall Street's main indexes dropped on Wednesday, as investors digested another supersized Federal Reserve hike and its commitment to keep up increases into 2023 to fight inflation.

The Federal Reserve raised benchmark interest rates by another three-quarter of a percentage point and indicated it will keep hiking well above the current level. That takes the bank's benchmark overnight rate target range to 3-3.25%. Fed Chair Jerome Powell vowed on Wednesday that he and his fellow policymakers would keep at their battle to beat down inflation.

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