Indian Markets Rebound Amid Federal Reserve Rate Hike Fears

Indian equity markets saw a recovery on Wednesday as the BSE Sensex climbed 244.02 points to 74,293.25 and the NSE Nifty rose 77.20 points to 23,201.85. This rebound followed a sharp decline on Tuesday that pushed the Nifty to a five-month low, driven by weak global markets and crude prices hovering near $108 per barrel.

The volatility is largely tied to the Federal Reserve System, as markets price in a more than 90% probability of an interest rate hike, which would be the first since 2023. This anticipation drove the 10-year US Treasury yield to its highest level in nearly two decades, triggering heavy outflows from foreign investors in Indian bond markets. Foreign Institutional Investors offloaded equities worth Rs 2,977.86 crore on Tuesday.

While value buying sparked the Wednesday recovery, analysts from HST Wealth suggest the market remains fragile. Future direction depends on the Federal Reserve's guidance regarding further tightening, as hawkish commentary could strengthen the dollar and put additional pressure on global equities and the rupee. In other domestic developments, the State Bank of India is scheduled to open the anchor book for its initial public offering on Wednesday, and a new fee on merchant transactions has been introduced, affecting digital payment firms like Paytm and MobiKwik.